There are lots of reasons to consider investing in health insurance. Health insurance can:
help pay for expenses from unexpected accidents and injuries
make regular and long-term care more affordable
promote well-being as trips to the doctor are often covered
But this year Californians have a new reason to add to that list – the upcoming health insurance penalty. 2020 marks a change in California’s laws that could impact you if you don’t have health coverage. Know your options to avoid facing a penalty for not having insurance.
What is a Health Insurance Penalty?
Health insurance tax penalties were introduced at the federal level with the Affordable Care Act, or Obamacare. This meant that all taxpayers across the country were required to obtain health insurance coverage or pay a tax penalty. The federal law was repealed and coverage was not mandatory in the state of California in 2019. However, California has now introduced a new state mandate for individual health care in 2020.
What is the Penalty for Not Having Health Insurance?
Under the new California state law, the failure to obtain minimal coverage before January 1, 2020 will result in penalties of:
• $695 per each adult in a household as well as $347.50 per each child
• 2.5% of the household’s annual income
(whichever is the higher amount of the two)
The fee would be determined when an individual files their 2020 income taxes and would be paid in 2021.
Are there Exemptions for the Tax Penalty for No Health Insurance 2020?
There are some unique circumstances in which you can avoid the new health insurance penalty. Some exemptions include:
• Individuals who do not file state income taxes
• Non-U.S. citizen or undocumented residents
• Members of federally recognized American Indian Tribes
• Individuals under incarceration
• Some instances of financial hardship
• Those with religious objections
• Individuals enrolled in restricted-scope Medi-Cal coverage
• U.S. citizens who live abroad during a tax year
If I Don’t Qualify for an Exemption, How Do I Avoid the Penalty for No Health Insurance 2020?
The best way to avoid the health insurance penalty is to obtain coverage as soon as possible during the open enrollment period, which began on October 15, 2019 and will continue through January 15, 2020.
If you already have a plan, the open enrollment period is still a good time to review your current policy and compare coverage options in case you discover an option that better suits your needs.
Where Can I Obtain Health Insurance Coverage or Research Options?
Covered California is the state’s health insurance marketplace that was established under the Affordable Care Act and serves as a resource to shop and compare plans. It is also the only source to apply for federal assistance.
What if I Have Concerns About Affording Health Insurance?
Health insurance can be expensive, but the good news is there are quality health insurance plans available at an affordable rate. The even better news is that you may qualify for a new subsidy program for low and middle income California residents.
In the past, individuals that earned between 138% and 400% of the federal poverty level were eligible for federal tax credits through Obamacare. The new California program will extend premium tax credits for taxpayers who make between 400% and 600% of the federal poverty level. This means individuals who make between $50,000 and $75,000 per year will qualify for subsidies and families who make between approximately $103,000 and $154,500 per year will qualify as well. The state subsidies will be offered in addition to any federal tax credits in which an individual is eligible.
Take advantage of the current open enrollment season to research your potential health insurance options and avoid tax penalties in the future. Freeway Insurance can determine if you qualify for a health care subsidy to cover some of your health insurance costs. Give us a call at 877-583-1475 or request a free California health insurance quote online.