Feds will use tax penalty data to find uninsured millennials

FORT LAUDERDALE, Fla. – With time running out for the Obama administration to prove the success of the Affordable Care Act, officials are aggressively targeting a group that could help turn things around: young people.

Federal health officials announced Tuesday they will comb tax records to find 18-34 year-olds who paid the penalty stipulated under President Barack Obama’s health act for not buying health insurance and reach out to them directly with emails to urge them to avoid even higher penalties scheduled for this year. They also plan to heavily advertise the enrolment campaign, including a promotion with trendy ride-sharing service Lyft to offer discounted rides to enrolment events.

Insurance companies need robust enrolment of healthy young people to balance the costs of caring for older, sicker adults, who signed up in droves for insurance under so-called Obamacare. The overhaul has been a financial drain for many companies entering their fourth year of the law. They’ve repeatedly said they were caught off guard by the condition of initial enrollees, who were sicker and required more services than insurers anticipated.

Roughly 12.7 million millennials remain uninsured, compared to 8.6 million in the 35-49 age bracket and 6.5 million uninsured 50-64-year-olds, according to the Urban Institute, a social and economic policy think-tank . That means there are still a lot of untapped young consumers out there to help offset costs if the government is successful in reaching them.

“We’ve gotten a lot better at reaching out to young consumers and using messages that we know work. The penalty is certainly one of those messages,” said Joshua Peck, chief marketing officer for the Centers for Medicare and Medicaid Services.

The minimum penalty under the health care reform rises to $695 in 2016 for someone uninsured a full 12 months and not eligible for one of the law’s exemptions. That’s more than double the corresponding figure of $325 for 2015. But the fines are even steeper for those with incomes of about $28,000 or higher, because the law sets the penalty as the greater of $695 or 2.5 per cent of taxable income this year.

About 45 per cent of taxpayers paying a penalty or claiming an exemption were under the age of 35, compared to about 30 per cent of all taxpayers in 2014, according to the federal government.

Since data shows that millennials are procrastinators who wait until the last minute to enrol, health officials will target their emails and media buys toward the end of the enrolment period. They’ll also follow up with consumers in real time if they open an account on but don’t end up completing an application or purchasing insurance and will also send reminders to pay their first premium. Sort of like a friendly nudge from mom and dad.

Republicans are vowing to repeal the law if they sweep the November elections, leaving little time for the Obama administration to tweak any shortcomings in the controversial health law.

Boosting the enrolment of younger people will help companies struggling financially to balance their risk pools. Aetna lost more than $100 million on its health law business last year but hopes to break even this year.

And while the Obama administration noted that younger enrollees are disproportionately represented among the uninsured, they also noted that coverage in that age group has still grown since 2010 when the law took effect. They said the uninsured rate for 19-25-year-olds fell to 15.8 per cent in 2015, which is less than half the uninsured rate for the same group in 2010.