In the wake of the troubled rollout of the public exchanges, which has delayed the ability of many individuals and small businesses to enroll in coverage offered through the exchanges, HHS has announced (here) a new hardship exemption from the individual mandate. Anyone who enrolls in coverage through an exchange by the end of the initial exchange enrollment period (March 31, 2014) will be exempt from the individual mandate during the period in 2014 before the date the exchange-based coverage becomes effective.
Background. The individual mandate is the rule that requires most Americans to maintain health insurance coverage or pay a penalty. It takes effect January 1, 2014. But there are a number of exemptions available. Those who qualify for an exemption will not owe a penalty even if they fail to maintain insurance coverage. One exemption category is for "hardships," as defined by the government.
Exchange Enrollment Period and Coverage Effective Date. The initial exchange enrollment period began October 1, 2013 and runs through March 31, 2014. No coverage under the exchange becomes effective before January 1, 2014. Beginning in December, those who enroll in coverage on or before the 15th of the month will have coverage that becomes effective on the first day of the next month. Those who enroll after the 15th of the month will have coverage that becomes effective on the first day of the second following month.
For example, an individual who enrolls for coverage on January 10, 2014 will have coverage effective as of February 1, 2014. But an individual who enrolls for coverage on January 20, 2014 will have coverage effective as of March 1, 2014.
Because the initial exchange enrollment period ends on March 31, 2014, individuals who enroll near the end of the enrollment period will purchase coverage that doesn't become effective until May 1, 2014.
Relief Provided. Due to the potential gap between the effective date of the individual mandate (January 1, 2014) and the date on which exchange-based coverage becomes effective (as late as May 1, 2014), HHS has provided relief from the individual mandate by expanding the hardship exemption to include months before exchange-based coverage becomes effective. Those enrolling by the end of the initial exchange enrollment period will be treated as having a hardship during the months before their exchange-purchased coverage becomes effective. This presumably reflects an assumption that, due to the delayed rollout of the exchanges, individuals may not be able to get enrolled in time for coverage to take effect January 1, 2014.