Sacramento >> The clock is ticking on tax filers who are facing a penalty for not having health insurance.
Covered California, the agency that administers so-called “Obamacare” in California, is offering consumers who were unaware of the tax penalty a chance to minimize the damage by getting insurance via a special-enrollment opportunity.
Through April 30, consumers are eligible to apply for health coverage during special enrollment by stating that they did not realize there was a tax penalty. To attest to this fact, they can select “Informed of Tax Penalty Risk” when filling out a special-enrollment application through a certified insurance agent or enrollment counselor.
“For the first time, health care and taxes now are linked arm in arm,” Covered California Executive Director Peter V. Lee said. “The law requires most people to be insured, and if you’re not, you may face a significant financial penalty when you file your taxes this year.”
Consumers who didn’t have insurance in 2014 but were eligible to enroll, risked a penalty of $95 per adult per household ($47.50 per child under 18) or 1 percent of their household income, whichever is greater.
In 2015 the penalty is much larger. Those who don’t buy health insurance in 2015 could be penalized $325 per adult in a household ($162.50 per child under 18) or 2 percent of their income, whichever is greater.
The new tax penalty for being uninsured — known as the “shared responsibility payment” — motivated many consumers to purchase insurance during the latest open-enrollment period. Covered California acknowledges that many people who are supposed to purchase insurance may be surprised when they file their taxes and learn they must pay a penalty for not having health coverage, Lee said.
“We don’t want anyone to feel blindsided by the shared responsibility payment,” Lee said. “That’s why we established this limited-time special enrollment that builds on the broader availability of coverage for Californians who have a change of circumstance making them eligible outside of open enrollment. If you didn’t realize the tax consequences of not having insurance, you can enroll in a Covered California plan up until April 30.”
Enrolling in coverage for 2015 will not reduce the penalty for not being insured during 2014. However, enrolling now could help minimize the penalty for being uninsured for 2015.
As the penalty increases, it makes more and more sense for people who have been waiting on the sidelines to get in and get covered, Lee said. In some cases, he argued, it actually costs less to buy insurance than to pay the penalty.
For example, a 30-year-old person in Los Angeles making $18,000 a year would pay $252 over the course of 2015 to be covered under the least expensive Bronze insurance plan. Or they could go without insurance for the entire year and pay a $325 penalty when they file their taxes next year.
A couple, both 30 years old and living in Los Angeles, earning $28,000 dollars a year combined, would pay $468 over the course of 2015 to be covered under the least expensive Bronze plan. Or they could go without insurance for the entire year and owe $650 when they file their taxes next year.
According to the Internal Revenue Service (IRS), California had 16.9 million individual tax filers in 2012. Potentially, some 338,000 to 676,000 California taxpayers could face a penalty.
“We’re nearing the finish line on the second year of this historic initiative, and we don’t want to leave anyone behind,” Lee said. “Millions of people have gotten covered, which in turn has provided them with the medical care they deserve at the time they need it.”
Lee said uninsured residents can still get covered by going to www.CoveredCA.com, where consumers can find the nearest Certified Enrollment Counselor or Certified Insurance Agent to help them enroll. Consumers can also call the Covered California Service Center — at (800) 300-1506 — where a representative will help them.
In addition to Covered California’s special-enrollment opportunities, consumers may also be able to qualify for Medi-Cal, which has year-round enrollment.
“It’s never smart to avoid having health insurance,” said Lee. “One accident can lead to an emergency room visit and tens of thousands of dollars in bills — or learning you have cancer when it’s too late to treat it. Now there’s another reason to get insured: taxes.”
