Californians again face a tax penalty for not having health insurance.
Gov. Gavin Newsom, left, signed into law the Legislature’s plan to reintroduce a so-called individual mandate, effective Jan. 1, 2020. Californians are required to have “minimal essential” health coverage.
Led by President Trump, the federal government in 2017 killed the Obamacare penalty, effective with this tax year.
The new state penalty is designed to encourage young healthy consumers to buy insurance, such as that offered by the state’s Covered California marketplace. This makes the pool of people getting health care healthier, lowering overall costs for providers.
Funds will be used to subsidize health coverage for more Californians, mostly in the middle class. (The governor’s office says subsidies will be “partially funded by restoration of an enforceable Individual Mandate.”) It also will fund expanded coverage for illegal immigrants up to age 26.
Newsom enacted the plan June 27 as he approved the $214.8 billion state budget plan. Massachusetts, New Jersey, Vermont and Washington, D.C., also have restored individual mandates for their residents.
Fines under the new California individual mandate will range from $695 to $3,252 a year, depending on income. The penalty should generate as much as $295 million in the next fiscal year
New healthcare subsidies offered by Covered California will benefit individuals earning almost $75,000 a year and families of four earning almost $155,000. Those people did not receive subsidies under the federal Affordable Care Act. About 200,000 residents would be eligible for the new subsidies, analysts say.
People who did not buy health coverage under Obamacare tended to be younger with relatively low incomes.
State Assemblywoman Melissa Melendez responded (via Twitter) regarding SB 78: “It makes no sense that young people making $30-50k per year are paying so that other people making $75k-130k per year can get a subsidy, The fine, or tax because that’s what it is, is $695 per adult, $347.50 per child, or 2 1/2 percent of a household’s gross income, whichever amount is greater.”
Newsom has backed establishment of a single-payer system in the state, while national Democrats move toward a “Medicare for all” system.
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