California loosens its individual mandate for health insurance

SACRAMENTO —  Concerned too many Californians were unaware they would face a hefty fine for not having health insurance, officials on Tuesday loosened a state law meant to push uninsured residents into buying medical coverage.

Covered California, the state’s Affordable Care Act insurance exchange, will allow residents to enroll in a healthcare plan through March 31 to avoid paying the individual mandate, which can be more than $2,000 for a family of four and will be assessed when uninsured residents file their taxes in 2021. The state expanded subsidies to offset the burden of paying for medical coverage, allowing a person making up to $74,940 and a family of four with a household income of up to $154,500 to qualify for the help.

Covered California officials said 625,000 new and renewing consumers qualified for subsidies during open enrollment, which initially ended Jan. 31. Open enrollment has now been extended to April 30, a move that the insurance exchange said could help hundreds of thousands of uninsured residents avoid paying the tax penalty. If an uninsured consumer enrolls in April, they could still be assessed a smaller fee for not carrying medical insurance. For at least the first three years, the penalty will be used to offset the state’s cost to provide larger health insurance subsidies.

“The penalty is on the books, but no one wants that money,” said Peter Lee, Covered California’s executive director. “We want that to be the economic nudge to get people covered.”

Lee said the threat of a penalty drove a 41% increase in people newly signing up for health insurance through Covered California, bringing that total to 418,052 residents. However, the health insurance exchange saw an 8% drop compared to last year in the number of residents renewing their health insurance. Lee blamed that drop on the federal government’s decision to remove its own individual mandate effective last January. The Trump administration’s action prompted Gov. Gavin Newsom to announce his own plan to create an uninsured penalty and expand health insurance subsidies.

Covered California said Tuesday that, on average, lower-income individuals received a subsidy of $608 per month when combining state subsidies and federal tax credits, which took monthly premiums down to $272. State subsidies for middle-income residents who did not previously qualify for any state or federal subsidies helped drive down premiums by an average of $504 per month for nearly 32,000 consumers.

Lee said even more striking was that more than 1 in 10 middle-income earners had their premiums reduced by more than $1,000 a month.

“The new state subsidies are making a huge difference to families across California,” he said.

As part of Tuesday’s announcement, the state will also keep enrollment open for consumers insured directly through private health plans who did not realize they qualified for state subsidies through Covered California. An estimated 280,000 residents are likely eligible for new state subsidies or existing federal ones but opted to keep their existing coverage.

Lee said the extended deadline to obtain coverage or switch to a plan that includes a state subsidy comes after Covered California surveyed insurance agents this month and found many reporting that consumers were still unaware that they would face a penalty if they did not have insurance.

“While we are pleased with the increase in new enrollment, we know hundreds of thousands of Californians are still going without coverage,” said Anthony Wright, executive director of the advocacy group Health Access California. “Many do not know about new state subsidies that could make their coverage more affordable or are not aware that California has reinstated the mandate for health coverage and that they may face a tax penalty. With this new enrollment period, Californians now have more time to sign up for healthcare and more financial help than any other state in the nation and we encourage everyone to take advantage.”