Uninsured Californians face increasing tax penalties

With tax season approaching, Covered California officials are reminding the public that those who do not receive health coverage from their employer and did not enroll in health coverage last year will face a tax penalty when they go to file their 2014 taxes due in April.

Those who continue without coverage in 2015 will see even steeper penalties next year.

To avoid next year’s tax penalty, also known as the “shared responsibility payment,” people must enroll before the Feb. 15 deadline. Coverage for those who meet the cutoff will start March 1. To receive coverage that begins Feb. 1, consumers must sign up by Thursday.

This upcoming tax season, the penalty fee for going without insurance is $95 per adult or 1 percent of yearly income per person, whichever is larger. Next year, when filing 2015 taxes, the fee will spike to $325 per adult or 2 percent of annual income.

During the 2016 filing season, the shared responsibility payment would increase to $695 per adult or 2.5 percent of income.

In a media conference call on Tuesday, Peter V. Lee, Covered California’s executive director, said consumers who were uninsured for less than three months will not be subject to the penalty. Those who were covered for part of the year will pay a prorated penalty.

Lee estimates that about 1 million people will be charged for lack of health insurance this tax season. But the number depends on how many people seek exemptions, he said.

Exemptions are granted to those who can prove qualifying financial or domestic hardship, as well as to those who can’t afford afford coverage options because the lowest-priced plan would cost more than 8 percent of annual income.

Those and other qualifying exemptions can be further discussed with a tax preparer. “As the penalty increases, it makes more and more sense for those who have been waiting on the sidelines to get in and get coverage,” Lee said.

During Tuesday’s call, Lee also revealed new enrollment numbers. As of Monday, 217,146 people have selected a coverage plan through Covered California during the second open enrollment period that started Nov. 15. An additional 304,394 people have been determined eligible but have not completed the enrollment process, Lee explained.

Enrollment numbers by region were not available Wednesday. During the first open enrollment period, more than 108,000 people in nine San Joaquin Valley counties, including Merced, enrolled in a health plan through Covered California.

State officials also announced 466,778 enrollments into Medi-Cal this time around.

Information on the number of consumers who renewed their coverage was not released. Officials expect that information to be available by early February.