Individual Mandate may be bigger incentive for young people to sign up

As we near the January 31st deadline for 2016 health insurance coverage, you may be scrambling to find a few more people to send to your private exchange site, where they can sign up for coverage on or off the exchange with the help of a licensed agent.

Here’s an idea: focus on the penalty. People who are motivated by deadlines generally are more focused on avoiding something bad than getting something good. Those who saw the advantage of guaranteed issue plans and premium tax credits have already signed up for coverage, but those who are more motivated by their desire to avoid shared responsibility penalties have probably been stalling or weighing their options.

As a new AP article suggests, “Millions of young adults healthy enough to think they don’t need insurance” may actually be motivated to shop by the individual mandate penalty, which increases this year to a minimum of $695 per adult and up to 2.5% of the household’s income. And when they shop, they may find that the cost of health coverage is not that much more expensive than the non-tax-deductible penalty. That’s because individual plans are age rated, and younger people have lower premiums than older individuals. And for young people fresh out of college who are working entry-level positions, their annual income may be low enough to qualify them for a premium tax credit, which will lower the net cost of their coverage even more.

The government seems to understand the motivating power of the individual mandate penalties: “Until now, the administration has mainly stressed the benefits: subsidized premiums and protection from the costs of unanticipated injury or serious illness. But with concerns that many young and healthy people still aren’t sold, officials are invoking the threat of penalties.”

The open enrollment period ends January 31st, and after that only those who qualify for a special enrollment period will be able to sign up for coverage that begins in 2016. For many brokers, February marks the beginning of their “slow season,” but those with an online storefront may just shift their focus to other products their prospects and existing clients may need. Learn more here.

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