Sign up for health care coverage or pay the price. That’s the message from Covered California officials, who urged consumers Wednesday to sign up for Obamacare coverage by the Jan. 31 deadline or face stiff tax penalties.
This year, the penalties are hitting harder, ranging from a minimum of $700 for an individual to as much as $10,000 for a family of four, depending on income. The average penalty in 2016 will be $969. That’s a 47 percent increase from last year, according to a recent analysis by the nonprofit Kaiser Family Foundation.
But taxes are only part of the equation for those who don’t get health coverage, said Peter Lee, executive director of Covered California, the state’s health care exchange for Obamacare policies.
“The bigger penalty,” said Lee, “is showing up at an emergency room and walking out with a bill in tens of thousands of dollars.” Or, he added, not getting regular checkups because of no insurance and then developing a late-stage cancer that went undetected. “Californians have a choice in signing up or rolling the dice and taking a big gamble.”
With less than three weeks left in this year’s open enrollment season, Covered California is reminding consumers who don’t have employer-provided insurance to purchase coverage.
Under the 2010 Affordable Care Act, tax penalties are considered a “shared responsibility” payment by those who can afford to buy health care coverage but choose not to do so. The penalties are either 2.5 percent of household income (up to a cap) or $695 a person and $347.50 per child, whichever is higher.
The Taxpayer Advocate Service, part of the IRS, has an online calculator attaxpayeradvocate.irs.gov where individuals can check what they might owe. Penalties would be due in April 2017 when individuals pay this year’s taxes.
Not everyone faces a tax penalty. Those for whom health care premiums are deemed unaffordable – 8 percent or more of household income – are exempt, as are those with certain economic hardships or religious objections.
As of last week, Lee said more than 230,000 Californians have signed up for Covered California policies during the three-month enrollment season, which started last November.