Since the Affordable Care Act revamped the health insurance marketplace as we once knew it, legislators have instigated various changes at both the state and federal level in order to keep pace with “growing pains” within the new system. Our marketplace here in California, called Covered California, has received praise for expanding healthcare coverage to millions of Californians who otherwise would not be able to afford a policy.

We have accomplished this goal by offering health insurance subsidies to those in lower income brackets, to help them afford monthly premiums. Subsidies were based upon those provided by the federal government, as described by the ACA.

However, coverage rates still have yet to reach 100 percent, and some middle income Californians were unable to take advantage of the subsidy program. In an effort to extend coverage to even more state residents, our legislature passed the State Individual Mandate and Penalty, which goes into effect on January 1, 2020.

Under the mandate, coverage under an approved healthcare plan is now mandatory, and enforced by a penalty for each uncovered household member. This penalty will amount to $695 per uncovered adult and $347 per child, or 2.5 percent of the household income (whichever is greater).These penalties will be assessed when you file your state tax return, and are paid to the state.

However, the state is also extending subsidies so that more Californians can afford their health insurance premiums.

Now, those who earn up to $75,000 (for individuals) or $150,000 (for a family of four) can also receive a premium subsidy from the state. These income caps are calculated to fall at 600 percent of the federal poverty level. Check with a licensed insurance representative to discover whether your family is eligible, and for a calculation of your estimated subsidy based upon your household income and family size.

Keep in mind that this law is different from the federal Individual Mandate, which has not been overturned, but for which the penalty was set at 0 dollars. Californians don’t have to worry about being doubly penalized for failing to enroll in health insurance. But, with premiums now more affordable for extended income brackets, we expect to see enrollment increase this year.

In order to comply with the new law, make sure to select a health insurance plan during Open Enrollment this year (November 1 through December 15). If you have questions about the state mandate law, or want to learn more about state-provided subsidies for health insurance, please contact our office and we’ll be happy to assist you.