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What You Need To Know About California Health Insurance Changes

There are several major changes to health insurance in California in 2020:

  • California state health insurance is valid and requires California residents to obtain health insurance
  • California's health insurance penalty has been reinstated, meaning that most California residents who choose not to purchase qualified health insurance will face a tax penalty.
  • A new government support program is expected to help 235,000 California residents who previously did not qualify for federal aid.

California State Restoration Individual Health Insurance

Since 2014, the federal Affordable Care Act (ACA) requires individual taxpayers and their dependents to maintain minimum basic coverage (MEC) or pay a federal tax penalty. However, Congress removed the federal tax penalty for noncompliance as of 2019 when it revised its tax code in 2017. As a result, California experienced an increase in health insurance premiums and a decrease in families with health insurance coverage in 2019. .

California joined 4 other states (Massachusetts, New Jersey, Rhode Island, and Vermont) and Washington, D.C. to enforce individual state laws. California health insurance law requires nearly all California residents to maintain MEC health insurance coverage for themselves and their dependents.

According to Covered California, the California Health Insurance Exchange, restoring California's singular mandate is one factor in making premiums, on average, 3.2% lower by 2020. Covered California estimates that California residents will save an average of $ 167 per year. In premiums during the year 2020 of coverage.

However, California residents who can afford health insurance but choose not to purchase the coverage may face a tax penalty. The penalty applies when preparing annual state tax returns. According to the California Privilege Tax Board (FTB), the penalty for not having health insurance is greater than 2.5% of a family's annual income or a fixed amount of $ 750 per adult and $ 375 per child (this number will increase every year with inflation) in a family. . The funds raised from the sanctions, which are expected to amount to about $ 1 billion over the next three years, will be used to fund California's new support program in 2020.

New Benefit Program: California State Health Insurance Protection

Under the California Health Insurance Act, California launched a new tax benefit program in 2020. The tax benefit program helps reduce the cost of health insurance for low- and middle-income California residents.

Previously, those who reached more than 400% of the Federal Poverty Line (FPL) were not eligible for premium tax credits. In 2020, those who earn between 400 and 600% of the FPL are eligible to receive benefits. This means that a family of four with an annual income of approximately $ 150,000 per year may be eligible for benefits.

This program aims to determine how much a California resident will pay for their health insurance premium as a percentage of their income, according to Covered California.

How do I know that I am eligible for benefits?

Generally, you are eligible for the California state health insurance cost benefit if you earn between 100% and 600% of the FPL. If you receive less than 100% of the FPL, you may qualify for Medi-Cal. If you get more than 600% of the FPL, you are probably not eligible for government benefits to help pay for your health insurance.

Benefits depend on the estimated amount of income you expect to generate during the next coverage year. To find out if you qualify for New California Support Program benefits, you can use the E-Health Support Calculator while shopping for health insurance. Visit the Individual and Family Health Insurance page, enter your ZIP code, complete a quick questionnaire, and click "Find Out If You Qualify." The electronic health calculator will calculate and inform you if the government can help reduce costs through subsidies.

Please note that you must report changes in income during the year. This way, if you receive a subsidy and see an increase in income that makes you ineligible for support, you will not have to pay back the ineligible amount at the end of the year. Conversely, if you think you've experienced a change in income that might qualify you for a benefit, be sure to report it so you don't lose your savings.

How can I avoid the tax penalty?

Your circumstances can change unexpectedly. This is especially true recently, as California residents grapple with the impact of the pandemic and wildfires. For your health and financial well-being, you need health insurance to help cover the high cost of Medicare, and to avoid the California health insurance penalty, it's tax time. Whether you are self-employed, between jobs, or retiring early, E-Health can help you find an affordable health insurance plan that meets your needs. Take a closer look at the health insurance options available, including:

  • ACA Plans on the State Health Insurance Exchange - An attractive option if you qualify for government benefits and can purchase health insurance during the annual open enrollment period in the fall or because your unique circumstances qualify for a special enrollment period.
  • Individual / Family Health Insurance Offered By Private OTC Insurance Companies - A preferred option for individuals who do not qualify for government benefits and do not want restrictions at the time of purchase.

Let E-Health help you find the plan that best meets your needs! Get an instant quote on the health insurance plans available where you live and find out if you qualify for a benefit. If you need further assistance, the e-health team of experienced health insurance agents is available to help you find the right plan online and over the phone. Start looking for your health insurance plan today!