California: CoveredCA confirms most uninsured residents don't know the mandate penalty is back or that they're eligible for tax credits

Last year, California passed several important bills related to expanding coverage in their ACA exchange, Covered California. Two of the biggest changes were the expansion of subsidies to middle-class enrollees earning 400-600% FPL (as well as enhancing subsidies for existing enrollees), and the reinstatement of the individual mandate penalty (the revenue from which is actually supposed to be used to help finance the expanded subsidies).

Just before Christmas, I noted that there may be a major awareness problem with the first of these:

Again, there's still another five full weeks of Open Enrollment in California (six, if you include the missing data from last week). As I've noted, they'll have to add at least 134,000 total enrollees to beat last year, or nearly 200,000 to beat their all-time high. From the looks of things, they're on track to hit that 615K figure in the 200-400% range, but the 400-600% range is gonna be a much steeper climb...which is ironic since that's the population which is eligible for the most dramatic price cuts.

So what's going on here? Well, my guess is that this is almost entirely a matter of awareness.

I'd be willing to bet that there are hundreds of thousands of middle-class Californians who did check out CoveredCA.com in the past, plugged in their income information, were disappointed to discover that they didn't qualify for financial help, haven't bothered checking again, and are now likely to tune out CoveredCA advertising, assuming that it doesn't apply to them.

This means that CoveredCA is going to have to make a concentrated effort (above and beyond what they're already doing) to get the word out to middle-class Californians that they ARE NOW ELIGIBLE for potentially MASSIVE subsidies...as much as $8,700 or more for single adults, or up to $18,000 or more for older couples.

Then, just a few hours later, my concerns about the second change (reinstatement of the mandate penalty) were also partly confirmed by this press release:

SACRAMENTO, Calif. — While a federal court ruling last week leaves the federal individual mandate in legal limbo, Californians are reminded that a state law will take effect on Jan. 1 requiring all Californians to have health insurance.

“Open enrollment is underway right now. That means now is the time to sign up for a quality health plan through Covered California so you are protected in case you get sick or injured, and so you do not have to worry about a possible penalty,” said Covered California Executive Director Peter V. Lee. “Writing a check to the Franchise Tax Board when you file your 2020 taxes isn’t the real penalty — it’s getting hurt or ill and ending up with $50,000 hospital bill.”

California created a new state individual mandate penalty that is similar to the Patient Protection and Affordable Care Act’s penalty. It will be administered by the Franchise Tax Board (FTB) and collected when people file their 2020 taxes starting in 2021.

“It’s important that everyone acts now to get health insurance starting in January 2020 to avoid the penalty when filing state tax returns in 2021,” said FTB Executive Officer Selvi Stanislaus.

For those facing a penalty, a family of four would pay at least $2,000, and potentially more, for not having health insurance throughout 2020.

The return of the penalty was an important element in Covered California’s record-low rate change of 0.8 percent in 2020, meaning consumers have already benefited from the new policy.

Well, today Covered California has issued a new press release which explicitly confirms the awareness problem regarding the mandate penalty:

With New Research Showing Californians Are Still Unaware of a Penalty for Going Without Health Coverage, Franchise Tax Board Chair Betty T. Yee and Covered California Urge Californians to Get Covered Right Away

  • A new survey shows 56 percent of uninsured Californians are unaware that California requires its residents to have health care coverage in 2020 or face a penalty.
  • The survey found that avoiding the penalty motivates those with health insurance to keep their coverage and encourages the uninsured to sign up.
  • Most people surveyed, including 62 percent of those uninsured, are not aware that they can get financial help to pay for their health coverage in 2020.
  • In addition, most of the uninsured have not checked to see if they are eligible for the financial help offered through Covered California.

SACRAMENTO, Calif. — Covered California Executive Director Peter V. Lee and State Controller and Franchise Tax Board Chair Betty T. Yee urged Californians on Thursday to get health coverage to avoid paying the new penalty now in effect for 2020. Their urging comes as new research released by Covered California shows that many still do not know about the law that took effect on Jan. 1.

The research also shows that many of those without health coverage do not know there is more financial help than ever before to buy health insurance, including new help for middle-income Californians.

“We all have work to do to make sure people in California know that if they can afford health insurance, they have to buy it this year or they will face a penalty next year,” said Covered California Executive Director Peter V. Lee. “Open enrollment is underway, and there’s more help than ever before. Now is the time to enroll to avoid the penalty and ensure you have the coverage you need.”

Controller Yee, who joined Lee at Thursday’s press conference, said taxpayers need to be aware of the penalty, known as the Individual Shared Responsibility Penalty, so they can take steps to avoid it when they file their taxes next year.

“I encourage everyone to secure qualifying health care coverage as soon as possible so they are not surprised with a state penalty when filing 2020 state tax returns in 2021,” Yee said. “There are lots of ways to get coverage, including through Covered California, where open enrollment continues through Jan. 31, and I urge you to look at all the options to get coverage as soon as you can.”

For those facing a penalty, a family of four could pay at least $2,000 for not having health insurance. Controller Yee said there is an estimator on the Franchise Tax Board website to assist consumers in understanding what they could pay. In addition, Covered California and Franchise Tax Board have developed a fact sheetwith more information about the penalty.

For 2020, Gov. Newsom and the state Legislature are making new financial help available to eligible consumers to help further lower the cost of their coverage. More than 500,000 Californians have already qualified for the new subsidies.

A market research report released by Covered California, “Californians’ Understanding of the Mandate to Have Health Coverage and the Awareness of Financial Help,”was conducted by Greenberg Brand Strategy from Dec. 6 to 18, 2019.

Among the findings:

  • Many Californians — especially the uninsured — are unaware of the state penalty. Many Californians reported being unaware of the requirement to have health insurance coverage in 2020 or else pay a penalty, including a majority of the uninsured (56 percent).
  • The uninsured are more likely to enroll in coverage if they are aware of the state mandate. Among the uninsured, 64 percent are more likely to enroll in health insurance to avoid the penalty. This is an increase of intent to enroll from 46 percent when uninsured respondents were asked at the beginning of the survey whether they plan to have health coverage in 2020.
  • The state mandate encourages already insured Californians to keep their coverage. Among the insured population, almost all respondents (91 percent) will keep their health insurance in 2020, and almost half (46 percent) state that avoiding the penalty is a factor in maintaining their coverage.
  • Many uninsured people are unaware that financial help is available. Among the uninsured, 62 percent are unaware that Covered California offers financial help to help pay for health insurance.
  • The uninsured are even less likely to know about the new financial help. Among the uninsured, only 27 percent are aware that Californians can receive even more financial help than ever before for health coverage, compared to the 38 percent who generally know that financial help is available.
  • Many uninsured Californians who could get financial help are not finding out if they are eligible. Nearly all the uninsured respondents surveyed (93 percent) could qualify for financial help. However, most uninsured respondents (62 percent) have not looked to see if they qualify for financial help.
  • Uninsured Californians are far more likely to enroll in coverage if given financial help. More than two-thirds of uninsured respondents stated that subsidies of $500 per month would make them likely to enroll in a health plan.
  • Uninsured middle-income Californians (making between 401 and 600 percent of the federal poverty level) are even more likely to enroll in coverage if they knew they were eligible for a $500 per month subsidy.
  • The average subsidy for eligible consumers earning less than 400 percent of the federal poverty level is $447 per month; the average state subsidy for eligible middle-income consumers is $460 per month.

With research showing that most of the uninsured have not checked to see if they are eligible for financial help, Lee encouraged Californians to look into it.

“You can find out in just a few minutes whether you are eligible for financial help from the federal government, the state, or both,” Lee said. “Do not leave money on the table; do not put yourself at risk if you get sick or ill; do not get stuck with a big bill when you pay your taxes in 2021.”

Lee said the population of the uninsured changes every year: With new people turning 26, moving to the state or leaving employer-based coverage to work on their own, there is a new group of Californians to inform every year. That group now includes people with higher incomes who qualify for financial help for the first time.

“California made a commitment to encourage more people to get covered through the penalty and by making that coverage more affordable through new financial help,” Lee said. “Together the penalty and new subsidies are powerful tools to making sure that Californians follow the law and sign up for a health insurance plan that will protect them and their family. We want to make sure they know about it.”

Californians Can Still Enroll

Covered California’s open-enrollment period runs through Jan. 31. Consumers can easily find out if they are eligible for financial help and see which plans are available in their area by entering their ZIP code, household income and the ages of those who need coverage into Covered California’s Shop and Compare Tool.

Those interested in learning more about their coverage options can:

  • Visit www.CoveredCA.com.
  • Get free and confidential in-person assistance, in a variety of languages, from a certified enroller.
  • Have a certified enroller call them and help them for free.
  • Call Covered California at (800) 300-1506.