On June 27th, Governor Gavin Newsom signed his first state budget into law for 2020. With the new state budget, Senate Bill 78 was also signed into law which reintroduces the tax penalty for not having minimum essential health insurance beginning in 2020. California is following other states such as Massachusetts and New Jersey which already implemented their own state tax penalties for not having minimum essential health coverage. With the federal tax penalty removed by President Trump’s tax bill, many states are implementing their own state-wide tax penalties to keep the health insurance mandate enforceable. California also banned short-term medical insurance in 2019 to prevent healthy individuals moving away from comprehensive Affordable Care Act plans.
Furthermore, SB 78 dramatically increases the income eligibility for health insurance premium tax credits from the current 400% of the Federal Poverty Level (FPL) cutoff to 600%. For example, an individual making nearly $75,000 or a family of 4 making as much as $154,500 in 2020 would be eligible for premium tax credits to alleviate the rising costs of health insurance. That compares to the 2019 income limits for subsidies of $48,560 for an individual or $100,400 for a family of four. Many people who currently do not qualify for subsidies should contact us to review their eligibility for subsidies when the 2020 Open Enrollment Period begins on November, 2019.
The reintroduced tax penalty is estimated to bring in revenues of $317 million for the coming year which will go towards funding the subsidies for people earning between 400-600% of the Federal Poverty Level. The penalty will also prevent healthy individuals from avoiding enrolling in health insurance, thus stabilizing the risk pools and limiting annual premium increases. We at Solid Health Insurance Services would like to see all Americans insured, especially considering medical bills are the leading cause of bankruptcy in the United States and responsible for 66.5% of all bankruptcies.
At Solid Health Insurance Services, we are dedicated to keeping our clients informed about the latest trends in the health, dental, vision, life and long-term care insurance. For more information, please do not hesitate to contact us at 310-909-6135 or at email@example.com.