Californians Need Health Insurance By Jan. 1 Or Risk Paying A New Penalty

Updated Dec. 16: Covered California announced it has extended the deadline for health coverage starting Jan. 1. The new deadline to enroll is Friday, Dec. 20. This story has been updated to reflect that. 

Californians must carry health insurance in 2020, or face a state-imposed penalty starting at $695 in 2021. 

Covered California and the California Franchise Tax Board are encouraging the state’s uninsured to enroll in a plan by Dec. 20. That’s the deadline for coverage that kicks in Jan. 1. The Covered California enrollment season lasts until Jan. 31.

“We want to help people be aware of what’s coming for tax year 2020,” said Jason Montiel, a spokesperson for the tax board. “We don’t want people to get into the summer and realize they didn’t have coverage and then find they’ll face a penalty.”

The deadline was originally Dec. 15, but Covered California extended it on Monday after it said it received "tens of thousands" of enrollments late last week.

The state mandate replaces a federal penalty for being uninsured, which was created under the Affordable Care Act. The Trump administration zeroed out that penalty effective 2019, so people who went uninsured this year will not pay a fine during when they pay their taxes next year.

But starting Jan. 1, 2020, Californians must enroll in a health insurance plan or risk paying a penalty when they file taxes in 2021. The penalties start at $695 for individuals and $2,085 for a family of four, according to the California Franchise Tax Board. There are allowances for some low-income Californians, and people who are without coverage less than three months. Non-citizens and members of federally-recognized Indian tribes including Alaskan Natives are also exempt. 

Gov. Gavin Newsom pushed for the state mandate, arguing fewer uninsured people would lead to a healthier California. He also proposed using the revenue from the penalty — estimated at about $317 million for next year ­— to subsidize health insurance for low and middle income patients buying through Covered California, the state’s health insurance exchange.

But some experts have questioned whether the threat of a penalty will be enough to convince the state’s remaining 3.5 million uninsured to enroll in coverage. A large portion of that group — roughly 1.5 million according to the Legislative Analyst’s Office —  is not eligible for most health insurance due to immigration status.

And Stanford University health policy expert Lanhee Chen said people will most likely just choose whatever option is cheaper: enrolling in a plan, or eating the penalty. 

“A mandate is not in and of itself a workable way to expand affordability or, frankly, compel coverage for those who don’t want it,” he said.

Still, many California advocates argue the mandate is key to achieving universal health care, the idea of getting everyone insured. The new coverage requirement is California’s latest attempt to combat the Trump administration’s moves against the ACA.

The state is already offering the extra premium assistance that Newsom says the penalty revenue will help fund.