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What's The Real Deadline For Buying Health Coverage?

Under the Affordable Care Act, nearly everyone will be required to have health insurance. If they don't, they'll have to pay the federal government a tax penalty.

But it turns out this is a case where there are deadlines, and then there are hard deadlines.

And with the federally run health insurance exchange at HealthCare.gov so mired in technology problems, figuring out the what counts as a real deadline has become a very hot topic.

On Monday, White House spokesman Jay Carney acknowledged that there's a disconnect between the dates when people are allowed to enroll in an insurance plan and when the penalties for not doing so kick in. "And those are going to be addressed," he said. In a media briefing Thursday, Health and Human Services spokeswoman Julie Bataille said of the March 31 deadline confusion, "We are working on it and will have something soon."

Here's a cheat sheet for sorting through the deadlines — and what the White House may need to do to clarify things.

It's been widely reported that Jan. 1, 2014, is when you need to have health insurance. What's that deadline all about?

That is the date when the so-called individual mandate to have health insurance becomes law. If you don't already get insurance through your job (including COBRA or a retirement plan), or public programs such as Medicare, Medicaid or the VA, you're supposed to buy insurance on the health insurance exchanges. To be insured by Jan. 1, you'd have to do that by Dec. 15.

That seems straightforward. What's the confusion all about?

The confusion comes from federal rules written by the IRS that spell out some of the nitty-gritty details about how the Affordable Care Act is to be implemented. One of those IRS rules says that people don't have to pay the tax penalty if they have a "short gap" in their coverage. The IRS defined a short gap as lasting less than three months.

So here's the rub: What if you start your short gap on Jan. 1? Reading the IRS rules, you might conclude that you could drag it out for "less than three months" and wait until March 31 to get insured.

So is March 31 the real deadline then?

Well, no. Remember how you needed to sign up by Dec. 15 to be covered by Jan. 1? There's always this lag. If you signed up for insurance on March 31, it wouldn't take effect until May 1. You'd have to pay the tax penalty for the month of April (it's prorated).

So is March 15 the real deadline then? That would have me covered by April 1, right?

Nope. This is where it gets really technical.

If your coverage doesn't start until April 1, then the IRS would consider your coverage gap to be more than three months. You'd still have to pay the tax penalty for the month of April.

Really?

Yes. See why this is confusing?

OK, so tell me, what is the real deadline?

The way the rules are currently written, the final deadline — if you don't want to pay any tax penalty at all — is Feb. 15. That would have you insured as of March 1.

That represents a six-week grace period from the Jan. 1 deadline we've been hearing about. So if you dread the idea of buying insurance on the exchange — but dread the idea of paying a tax penalty even more — you've got a little time to drag your heels.

But six weeks also represents a much shorter grace period than the roughly 90-day time frame that seems to have been the spirit of what the IRS intended in its rules.

So what can the White House do about this?

On Wednesday, the White House released a statement that said, "If you sign up for insurance by the end of March, you will not face a penalty." So it's possible that the ultimate deadline will move again. But the IRS will have to revise its rules to make that happen.

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