Uninsured Due To COVID-19? You Might Still Have To Pay A Penalty To California

Uninsured Due To COVID-19? You Might Still Have To Pay A Penalty To California

May 22, 2020 Off By administrator

Millions of Californians are losing their jobs — and their job-based health insurance — due to the COVID-19 pandemic, and some of them could face a state-imposed fine for not being covered.

California Gov. Gavin Newsom recently established a statewide penalty for not carrying health insurance, to replace the one that the federal government eliminated. He says it’s a way to encourage people to get covered, while also raising revenue to support premium assistance for lower and middle-class families. 

But some experts say the state should reconsider imposing fines on Californians who are already struggling to get by in the current economic recession. 

The Franchise Tax Board will collect the fines in 2021, based on peoples’ insurance status in 2020. According to the governor’s recently revised budget proposal, the state expects to collect an extra $15 million in fines, based on the number of people who will become uninsured this year due to COVID-19. That brings the estimated revenue total for 2021 to $335 million, according to H.D. Palmer, deputy director of the state’s Department of Finance.

Palmer says the actual estimated increase will be $17.8 million. He says the administration does not plan to make any adjustments to the penalty in light of the pandemic. 

Not everyone without insurance will be subject to the penalty. People who go fewer than three months without coverage don’t have to pay, nor do American Indians and Alaskan Natives, people who are undocumented or incarcerated, or people who make below $14,500 annually, Covered California, the state’s health insurance marketplace, considers exemptions for people experiencing an economic hardship or people who are religiously opposed to health insurance.

But Laurel Lucia, director of the health care program at the UC Berkeley Center for Labor Research and Education, says some people will still face a fine.

“I think it’s worth exploring whether a temporary exemption is needed for Californians who have lost coverage due to COVID-related hardship, but are not eligible for one of the existing exemptions,” she said. 

The penalty varies based on a taxpayer’s income level and how long they go without coverage in 2020. An individual who makes $14,600 and goes uninsured for a year would pay $695. A family of four with an annual income of $150,000 that goes without coverage for that same period would pay a little over $2,000 in fines. Californians can calculate their penalty here.

Anthony Wright, director of consumer advocacy group Health Access, says the point of the mandate should not be to raise more revenue for the state.

“The goal is to get people connected to coverage, and that’s even more important in the middle of the pandemic,” he said. “In our ideal world, nobody pays the penalty because people are enrolled and covered. If there is a sign that more people are paying the penalty, that suggests a policy failure that we aren’t doing enough to get people…

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