Couple’s Penalty For Shoddy Health Coverage Resonates Nationally

Prediction: The name Destito is going to be bandied about in national politics. I can even imagine an attack ad against ObamaCare: “Do you want to become a Destito?”

Boston Herald columnist Margery Eagan listened in on the Destitos’ appeal hearing with the state Connector, the agency that helps Massachusetts residents shop for and obtain health insurance, and describes it in the Herald here. She writes that the Plainville couple, both 50 and already bankrupt, face a $3,000 fine because the shoddy health insurance they bought after their business folded “apparently does not pass muster with the state’s mandatory universal health insurance law.”

Do I hear the conservative talk show hosts clearing their throats? Already, Newt Gingrich wielded the Herald report against Mitt Romney in the Oct. 18 Republican presidential debate. The Destitos’ case touches on the third rail of health reform politics: the “individual mandate” that requires virtually everyone to have health insurance or pay a penalty, for reasons of both equity and economics. it’s the hottest-button issue in national health reform, and faces major legal challenges. Posted yesterday, the Herald column has already garnered over 140 comments, including this from MuffinMom: “They had health inurance and the state says it wasn’t enough and is fining them???? Beyond the pale!”

‘An avenue for individuals to come tell their stories to a human being’

But before the Destito case goes national, here’s some important context from the Connector: State law does require that health insurance fulfill some minimal coverage levels to count under the mandate, but residents who face fines have ample rights to appeal the fines and explain their economic straits, and their appeals win more often than not.

Connector chief Glen Shor

Glen Shor, chief of the Connector, emphasizes that the appeals process is, very deliberately, a “point of flexibility” in the system, meant to ensure that penalties imposed under the individual mandate “in any given instance are not solely a function of rules on paper doing their thing. Rather, the appeals process creates an avenue for individuals to come tell their stories to a human being, encompassing all the relevant details of their individual lives.”

The individual mandate exists for important reasons, he said: “To bring people into the the ranks of the insured; to ensure that their insurance is meaningful and to ensure that this collective endeavor to achieve near-universal coverage in Massachusetts is achieved through shared responsibility.

All those considerations are balanced in the administration of the individual mandate in the appeals process. But we’re very proud to have an appeals process here that makes sure that decisions about the applicability of the individual mandate are not really mechanical rules and regulations doing their thing, but rather are based on individuals’ stories that they can tell, and we try to make it easy for them to tell those stories through the appeals process.”

My best guess is that the Destitos’ economic woes made a good enough story to spare them the penalties. The Herald says a decision is expected in a month.

Another important bit of context from Glen Shor: “There are not huge amounts of people who are facing tax penalties in the commonwealth for not having coverage or compliant coverage, because the lion’s share do have coverage.”

The Connector has heard about 8,000 appeals since 2008, a couple of thousand a year, in a state of over 6 million people, 98% of whom have health insurance.

Connector spokesman Richard Powers sent over this statement:

It’s been a rough ride in this economy over the past three years. No matter what the rules say about the type of insurance one must have, the appeals process lets people tell their own story to an independent hearing officer in a way that rules can’t capture. An approval rate of 60 percent demonstrates those people are being heard.

The penalty appeal regulations at Title 956 of the Code of Massachusetts Regulations, Section 6.08 state that “the Connector shall consider whether, within the tax year for which the penalty was assessed, the Appellant:

Was homeless, or was more than 30 days in arrears in rent or mortgage payments, or received an eviction or foreclosure notice;

Received a shut-off notice, or was shut off, or was refused the delivery of essential utilities (gas, electric, oil, water, or telephone);

Incurred a significant, unexpected increase in essential expenses resulting directly from the consequences of:

  1. Domestic violence;
  2. The death of a spouse, family member, or partner with primary responsibility for child care where that spouse, family member or partner had shared household expenses;
  3. The sudden responsibility for providing full care for an aging parent or other family member, including a major extended illness of a child that requires a working parent to hire a full-time caretaker for the child; or
  4. A fire, flood, natural disaster, or other unexpected natural or human-caused event causing substantial household or personal damage for the individual filing the appeal; or

Experienced financial circumstances such that the expense of purchasing health insurance that met minimum creditable coverage standards would have caused him to experience a serious deprivation of food, shelter, clothing or other necessities.

The regulations also state that “The Connector shall consider any other grounds that an Appellant may claim demonstrates that he could not afford to purchase health insurance that met minimum creditable coverage standards.”

My read: Any persuasive argument can carry the day with the Connector. Still, State Rep. Dan Winslow makes a good point in the Herald column: “Buying insurance isn’t enough when it’s bought from a licensed broker in Massachusetts? They should go after the broker, not the people.”

Maybe at the very least, it might help for us all to know the standards that a health plan must meet under the individual mandate. The Connector’s page on “Minimum Creditable Coverage” is here, and all plans bought through the Connector qualify.

Readers, if you’ve paid for a health plan only to find out it failed to qualify, please share your warnings in the Comments section below.

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  • Licensed Insurance Agent

    Carey did you have to repeat Mr. Winslow’s comment verbatim, without even so much as an ounce of effort to find out who sold the couple their insurance? Chances are, this couple purchased insurance through an organization who was known for advertising on telephone poles and selling their policies to self employed persons, whose products are no longer offered in the state.  Also, did you know    Did you know that there are many reputable, licensed professional insurance agents in the state of Massachusetts (check, who would gladly counsel this couple on what constitutes creditable coverage and how to go about getting it, but that the Connector excluded agents from receiving any compensation for helping indivdiual consumers purchase insurance in the state?  For all the knowledge we have, and all the work we do for consumers in this state without compensation, it is a shame that you feel a need to repeat a thoughtless, uninformed comment from one legislator here.

    • Eric J.

      Note that the original Herald article states that Mr. Destito obtained his health insurance through the union he belongs to.  My guess is that it is a national plan that was not offering minimal creditable coverage.  If the plan is based in Massachusetts it needs to.

      • Licensed Insurance Agent

        Thanks Eric – certainly out of state employer groups and unions are not subject to the MCC requirements of the state.  Those requirements are imposed on individuals.  But brokers do counsel out of state employers on those requirements because they have to provide a 1099 HC to covered members who are MA residents, whether MCC or not.  I wonder if the couple ever received that tax document or whether their accountant asked for it when doing their taxes. It seems like a cheap shot in the blame game to name the insurance agent, who was likely not even a player in the process!  I welcome Ms. Rosenberg’s and Mr. Winslow’s initiative to find out a bit more on exactly what we do in working with individual consumers and employer groups rather than assume we are the problem here.  Carey are you listening???

  • Brian Rosman

    It’s amusing to read the Herald fulminate about a state agency showing flexibility and respectfully treating people as individuals.

    It’s even more amusing to recall the Herald’s editorial position on the individual mandate. Before the mandate became part of “ObamaCare,” the Herald understood how requiring individuals to take responsibility where appropriate – enforced  through the tax system – was good policy:

    “The governor’s proposal to make coverage mandatory for
    individuals – while helping them piece it all together – should be part of the
    solution. … An individual mandate that carries tax penalties for failure to obtain insurance will help meet the coverage goals. (Boston Herald editorial, 2/6/2006)


    When the individual mandate penalties were instituted, Governor Patrick urged the Connector to be compassionate and generous in providing mandate waivers to people who can’t afford to buy coverage. The Connector is implementing this policy. The Destito’s are being given an opportunity to let an independent evaluator hear their side.

    Our state’s 98+% coverage rate demonstrates the success of our coverage policy. The next challenge is to reduce the cost of care, by re-orienting our health care delivery system to focus on prevention, wellness and overall health.

    Brian Rosman
    Health Care For All

    • careyg

      Wow, Brian, you either have very good files or a really great memory — or both!

  • Carey Goldberg

    Thanks so much for your valuable points. Since, according to the Herald, Mr. Winslow also listened in on the hearing, I figure he was privy to the whole story and when he said the insurance was brought from a licensed broker, he was citing a fact of the case rather than just making an uninformed comment. I truly did not intend to malign brokers, it just did seem like a natural question.