The Obama administration has bowed to lobbying from Congress, including by independent Sen. Angus King of Maine, agreeing on Friday to give consumers facing a tax penalty for failing to purchase health insurance extra time to sign up for Affordable Care Act benefits.

People who were uninsured in 2014 and discovered while doing their taxes that they owed a $95 penalty for failing to have health insurance can now sign up for 2015 coverage in the marketplace from March 15 through April 30. The original cutoff for enrolling to get 2015 insurance was Feb. 15. Nearly 75,000 Mainers were among the 11.4 million people in the United States who signed up before the deadline. The federal government estimates that between 2 percent and 4 percent of taxpayers will pay the $95 penalty.

Meanwhile, about 800,000 people nationwide who used to sign up for insurance were sent incorrect tax information. Federal officials urged those who were given the wrong information to wait until corrected statements are sent out, probably in a week or two.

The Affordable Care Act’s marketplace offers subsidized insurance for individuals who don’t have insurance through an employer – often self-employed or part-time workers. The ACA also imposes a penalty for those who fail to obtain insurance. The penalty, also called the individual mandate, has been the subject of much debate and a U.S. Supreme Court challenge, but many health insurance experts argue it’s necessary to spur young, healthy people to sign up. With more young people in the insurance pools, the overall cost of insurance is reduced because young adults tend to need less expensive care than older ones.

While the 2014 tax penalty still will be owed by those who were uninsured last year, by purchasing coverage this year patients can avoid a $325 penalty on their 2015 taxes, which will be due in 2016. Every year, the penalties become more punitive for individuals who fail to purchase insurance. But federal officials said some leeway is being given because the complex law is still new.

“We recognize that this is the first tax filing season where consumers may have to pay a fee or claim an exemption for not having health insurance coverage,” Marilyn Tavenner, an administrator for the U.S. Centers for Medicare and Medicaid Services, said in a statement.

Those claiming that they didn’t know about the penalty will have to sign a statement attesting that they were unaware of the penalty, discovered it while doing their taxes, and paid the $95 penalty on their 2014 taxes.

King signed a letter sent by several congressional Democrats to Sylvia Burwell, who heads the U.S. Department of Health and Human Services, urging her to create such a special enrollment period.

King said in an interview Friday that he’s “delighted” that DHHS responded quickly to the letter.

“I think this will help out a lot of people who were sitting down to do their taxes and didn’t realize how this is going to work,” King said.

Emily Brostek, executive director of Consumers for Affordable Health Care, an Augusta-based health policy nonprofit, said there’s some uncertainty on how it will work, especially because the special enrollment period corresponds with the time when people do their taxes and ends only two weeks after the April 15 deadline to file federal income taxes. But overall, she said it should benefit people who paid a penalty and now want insurance.

“It’s great news as we start to get into tax season,” Brostek said. “There are people, despite Maine’s strong enrollment numbers, who don’t realize the implications that this has on their taxes. Some people may still decide to pay the penalty and that’s fine, but people really need to understand their options. To have this kind of teaching moment is really a great gift that will help a lot of people.”

According to a December survey of the uninsured by the Urban Institute, 45 percent had not heard about or only knew “a little” about the ACA’s tax penalties.

Joe Lawlor can be contacted at 791-6376 or at:

[email protected]

Twitter: joelawlorph

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