California offers health insurance for as little as $10 a month. Some pay more in tax penalties


To sum up

California is one of four states that imposes a tax penalty on uninsured households. Many people who pay the fines are eligible for highly subsidized health insurance through Covered California.

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Californians without health insurance face tax penalties again this year, and some may pay more in fines than they would spend to buy coverage, state officials say.

That’s because some of them may qualify for heavily subsidized insurance and don’t know it. California’s insurance marketplace, Covered California, offers health insurance for as little as $10 a month, with rates based on income and household size, as well as location and age.

There are many people who are paying more for the penalty by a large margin, in some cases, than they would pay for the peace of mind of coverage. We should all take this as a call to action because this shouldn’t be happening, Jessica Altman, executive director of Covered California, the state’s insurance marketplace, said during her board meeting of February

During fiscal 2022, the latest year for which data is available, more than 271,000 households paid fines for not having health insurance the previous year, according to the Franchise Tax Board. All together, these Californians paid the state about $312 million.

The average penalty per household that year? $1,149.

California is one of four states, plus the District of Columbia, that penalizes residents for not having health insurance. This tax season, Californians are seeing health insurance penalties of up to $850 per adult and $425 per child.

Who Pays the California Health Insurance Penalty?

Lower-income households bear the brunt of the state’s insurance penalty. About 60% of those who paid the fines earned $50,000 or less.

About 600,000 uninsured Californians are eligible for subsidized insurance through Covered California, according to UCLA Center for Health Policy Research estimates cited by the agency.

Of those, 260,000 could enroll in a health plan for less than $10 a month or snag a high-deductible plan with free monthly premiums, Covered California spokesman Jagdip Dhillon said in an email.

For example, a family of four in Los Angeles making $50,000 could opt for a $28-a-month standard plan or a high-deductible plan with no monthly premiums, according to Covered California’s quote tool. Meanwhile, a single person making the same amount in the same city would pay about $295 a month for a standard plan.

People may be without insurance because it’s not yet affordable for them, or because they don’t know about generous subsidies, said Alicia Emanuel, staff attorney and advocate for the National Health Law Program.

Californians continue to really struggle between having to pay for health care and thinking about basic needs, Emanuel said.

As good a job as Covered California does in all of their marketing and outreach efforts, I think health care is still a scary topic for people. It is complicated. I think that means we need to work more collectively to get the word out.

Privacy law limits direct disclosure

While the state may have an idea of ​​who is going uninsured and who may be eligible for a low-cost plan, targeting those people isn’t as easy as having an insurance agent call them. Covered California officials said that under state law, the agency cannot proactively share consumer information with enrollment counselors. Instead, the agency sends information to people so they can then seek help on their own.

Not all uninsured Californians are penalized. There are exemptions for reasons such as living in California for only part of the year, reporting a hardship, or going without coverage for less than three months. Individuals can also apply for a waiver if health coverage is deemed unaffordable, if that coverage would cost more than 8.17% of household income.

Undocumented immigrants are also exempt from the insurance mandate because the federal Affordable Care Act prohibits them from buying health coverage on state insurance marketplaces. California allows low-income undocumented immigrants to enter the Medi-Cal program, but they are not penalized for not enrolling.

The open enrollment period to buy a plan through Covered California is now closed, but people can still sign up if they have a life-changing event, such as having a child, getting married, or losing their job.

California Subsidized Health Coverage

Insurance plans purchased through the marketplace are heavily subsidized for thousands of Californians because of federal help provided first by the American Rescue Plan in 2021 and continued by the Inflation Reduction Act in 2022. Federal funding additional means that Californians can receive improved subsidies for health insurance through 2025. .

Experts say the extra help makes all the difference. Last month, Covered California announced that a record number of nearly 1.8 million people had selected a plan through the marketplace by 2024, including about 300,000 new enrollees. Emanuel said he would expect that to result in fewer households paying penalties next year.

In 2019, Congress and the Trump administration eliminated a provision in the Affordable Care Act of 2010 that required people to buy insurance or pay a tax penalty. Shortly thereafter, Governor Gavin Newsom signed a law requiring Californians to purchase insurance and establishing a penalty for those who did not have insurance.

The health mandate has been considered unpopular but effective in getting people covered.

In 2022, California reached an all-time low of 6.2% uninsured among people under 65. Experts and state officials say that as California reduces the number of uninsured people, those who remain will only be the hardest to reach.

With the support of the California Health Care Foundation (CHCF), which works to ensure this people have access to the care they need, when they need it, at a price they can afford. visit www.chcf.org to learn more


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