What tax penalty? Covered California gives uninsured time to avoid it

Covered California officials announced Friday that consumers who were not aware of or did not understand the tax penalty for being uninsured will now have until April 30 to sign up for coverage.

The announcement comes a few days after officials extended the open enrollment deadline to Sunday.

Through this new window, Californians will now have from Monday to April 30 to enroll in health coverage by attesting they were not aware there was tax penalty for being uninsured. To do this, consumers can select “Informed of Tax Penalty Risk” when filling out an application on CoveredCA.com, or seek assistance from an enrollment counselor or insurance agent. Copies of tax forms will not be required, officials said.

“For the first time, health care and taxes are now linked arm in arm,” said Peter V. Lee, Covered California executive director, in a press release. “The law requires everyone to be insured, and if you’re not, you may face a significant financial penalty when you file your taxes this year.”

This special enrollment opportunity does not mean consumers will be exempt from this year’s penalty for not being insured in 2014, but it will help people avoid a steeper penalty next year, Lee explained in a media conference call. However, there are penalty exemptions for those with proven financial hardship.

Those who can afford insurance but choose not to buy in 2015 will be subject to paying $325 per adult or 2 percent of income, whichever is greater.

Lee said he sees this as a teachable moment for Californians. He explained that the idea of the extension came after officials learned that many people were surprised by the news of a penalty when filing their taxes.

Despite the education and outreach, Lee said, it is not surprising that people were unaware of the penalty risk. “Having heard of the penalty is different than knowing it applies to you,” he said.

As of Feb. 15, 1.4 million Californians had renewed or just purchased health coverage through Covered California. Officials did not have estimates on how many people they expected would obtain coverage during this new special enrollment period.

This story was originally published February 20, 2015 at 9:13 PM with the headline "What tax penalty? Covered California gives uninsured time to avoid it."