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PPACA tax penalty drove more spring health sales in South

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Only about 15 percent of the consumers who bought individual major medical coverage through the HealthCare.gov exchanges this past spring used the confusion about the tax penalty on the uninsured to qualify for a special enrollment period (SEP) for major medical coverage.

About half of the consumers told HealthCare.gov they were applying for SEPs because they had lost other coverage. But the percentage of consumers who gave tax confusion as an excuse when they bought coverage in the spring was much higher in Southern states than in other states.

See also: How to get those special PPACA sales feelings

In Mississippi, for example, 2,932 SEP users, or 26 percent of all of the state’s SEP users, received a tax-season SEP. Tax-season SEPs also accounted for more than 15 percent of SEPs in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas.

Tax-season SEPs accounted for fewer 10 percent of SEPs in Delaware, Iowa, North Dakota, New Mexico, Ohio, Pennsylvania and Wisconsin. 

The Centers for Medicare & Medicaid Services (CMS) has included figures on SEP justifications in a new batch of data on plan selection activity at the HealthCare.gov exchanges. The report covers the period from Feb. 23, when the 2015 open enrollment period officially ended, and June 30.

See also: PPACA Enrollment Period 2015: The curtain (really) falls

Regulators, exchanges and insurers set up the enrollment calendar system in an effort to keep consumers from using the new Patient Protection and Affordable Care Act (PPACA) limits on medical underwriting as a chance to wait to pay for health insurance only when they already know they are very sick. 

Supporters of the enrollment calendar system hope that consumers will be more likely to pay for coverage when they are healthy if they know they will have trouble getting covered if they need expensive medical care outside the open enrollment period.

Consumers can qualify for SEPs, or exceptions from the enrollment period system, when they lose major medical coverage or go through major life changes, such as the birth or adoption of a child.

In the 37 states that use the HealthCare.gov enrollment, a total of about 944,000 consumers chose qualified health plan (QHP) options through the HealthCare.gov system from Feb. 23 through June 30.

About 19 percent qualified for SEPs after making an unsuccessful effort to apply for Medicaid or Children’s Health Insurance Plan (CHIP) coverage. Only 16 percent of the SEPs were the result of life changes, reports of problems with agents and brokers, or other types of justifications, officials say.

About 31 percent of the HealthCare.gov SEP period enrollees were ages 18 to 34, compared with 38 percent of the HealthCare.gov open enrollment period enrollees, officials say.

See also: 5 states where new public exchange business poured in