Up to 400,000 liable for health insurance penalties, despite increased purchases

More people than ever are buying individual health insurance policies on federal and state exchanges, but a large number of Californians are still on the hook for fines

Insurance News


As many as 400,000 Californians could pay a large tax fee this year and the next for not having adequate health insurance.

Despite the increase in the number of shoppers on state and federal exchanges, Covered California estimates that a large portion are still choosing to pay a penalty over purchasing a health plan.

For the 2015 tax year, that means a minimum penalty of $325, though income and family factors make that higher for most. According to Peter Lee, executive director of Covered California, an individual making $40,000 a year could pay $594 and a family of four making $80,000 would be on the hook for $1,188.

Next year, the penalties will increase to a minimum of $2,000 for a family of four.

While some may be exempt from the fines – those for whom a bronze plan costs more than 8% of their income – the majority face these ongoing and increasing fees.

Lee is using this information to try to encourage more Californians to sign up for a plan.

“Someone that decides to go without health insurance, it’s not just on them,” he said. “Because everyday people are showing up in California’s hospitals without health insurance and we are all paying the bills.”

Lee also emphasized that taking a chance of remaining uncovered is more financially damaging than the cost of the tax penalty.

“What happens if you go without insurance and show up at the ER?” he asked. “You go in there, have a back injury, you’re going to end up owing $12,000, $20,000, $50,000.”

Insurance agents and brokers have been working overtime to enroll Californians in health insurance plans as the exchange continues through its third open enrollment season.

They will have until January 15 to enroll consumers wanting a health insurance plans that starts on February 1. The season runs through January 31, and anyone signing up between January 16 and January 31 will have their health coverage start on March 1.

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