Californians who do not receive health insurance through their jobs or public insurance programs have until Friday to sign up for health coverage for 2020 — or face a tax penalty.
About 318,000 people have newly enrolled in health insurance through Covered California, the state marketplace created by the Affordable Care Act, since open enrollment began Oct. 15.
For those who enroll by the Friday deadline, benefits will take effect on Saturday. After that, only those with a qualifying life event, such as a job change or a move, can sign up.
California for the first time is requiring all residents to buy insurance or pay a tax penalty of $695 per adult and $347.50 per child under 18, or 2.5% of one’s annual income, whichever is higher. Previously, all Americans were required to buy insurance under the federal health care reform law, but Congress repealed that mandate in 2017. California and several other states adopted their own state mandates in response to the federal repeal, to try to get more residents insured.
California is also for the first time providing financial assistance to middle-income consumers to buy insurance. These state subsidies, which vary depending on one’s income, are on top of existing federal subsidies that help people pay for monthly premiums.
Many Californians don’t know about the state mandate or state financial assistance, according to a December survey by Covered California. Fifty-six percent of uninsured residents and 38% of insured residents were not aware of the requirement to buy insurance, the survey found, and 62% of uninsured residents were not aware financial help is available.
In California, people who earn between 138% and 400% of the federal poverty level (between about $17,000 and $50,000 a year) are eligible for a federal subsidy. People who earn between between 200% and 400% of the federal poverty level ($25,000 to $50,000) are eligible for federal and state subsidies. People who earn between 400% and 600% of the federal poverty level ($50,000 to $75,000) are eligible for state subsidies.
The subsidies are estimated to cost $429 million in 2020, and most of the money will come from penalties collected from those who forgo insurance.
There are a number of exemptions that will allow Californians to avoid the penalty, including living abroad, being uninsured for less than three consecutive months, or if one’s income is too low to file taxes. Most exemptions can be claimed on the state income tax return when filing your taxes. A full list of exemptions is on Covered California’s website or the Franchise Tax Board website.