Sign Up for Health Insurance—or Pay Up for Not Having It, California's Obamacare Exchange Warns

California's Obamacare exchange to stress individual mandate penalty as open enrollment draws to a close


Sign up for health insurance—or pay up for remaining uninsured. As the health law's second open enrollment period draws to a close, Covered California, the largest of the state-run health insurance exchanges set up under Obamacare, is about to start emphasizing the tax penalties one can incur by not getting covered. From a press release today:

It's important that consumers understand now that the cost of remaining uninsured is rising," Covered California Executive Director Peter V. Lee said. "This year, a family of four earning $70,000 a year could pay close to $1,000 in their taxes if they remain uninsured in 2015."

The penalty, known as the "shared responsibility payment," takes effect for 2014, and many who were uninsured will see an impact when they prepare their taxes due in April of this year. However, the penalty rises substantially for 2015, meaning it's important that all uninsured Californians know this and take steps now — before open enrollment ends — to avoid significant penalties when they prepare their 2015 taxes due next year.

"Shared responsibility payment"—in plain English, the fine for declining to carry qualifying coverage—remains one of the most absurd bureaucratic euphemisms in recent memory. 

I suppose it's supposed to evoke feelings of togetherness and community, but there's not much sharing going on: It's your responsibility to either get coverage or pay the fine. And figure out how much coverage you can afford, and what subsidy you qualify for, and so on and so forth.

Which could prove to be an unexpected headache for a lot of folks covered under the law.

The first set of penalties will be assessed during this year's tax season. According to the Los Angeles Times, experts believe that 40-50 percent of families receiving public subsidies under the law might end up owing money back because their subsidy was too large. 

Insurance subsidies provided through Obamacare are based on expected income for the upcoming year; if a family's income turns out to be higher than projected, then the subsidy amount gets recalculated downward, and the family owes the government the difference out of any tax return.

Now, in some cases it will mean that families get money back. But that's not where the problems will occur. The L.A. Times quotes a health policy professor who puts the adjustments in context:

"This could flip people from having a refund to not," said John Graves, an assistant professor of health policy at Vanderbilt University in Nashville. "Nobody can project their income down to the last dollar. It could be a huge deal."

Could be! We'll have to wait until tax season to find out. In the meantime, Covered California is posting a warning.

"This is an important message that should be heard by Californians of all income levels," said Toby Douglas, director of the California Department of Health Care Services (DHCS), which operates the Medi-Cal program. "Applying for coverage not only gives you an opportunity to get comprehensive health care; it can help you avoid a penalty that could hurt you and your family."

Well, at least Douglas and the folks at Covered California are willing to acknowledge that Obamacare includes a penalty that could hurt individuals and their families.

This approach was probably inevitable; the administration and its allies don't always like to talk about the mandate, preferring to emphasize the benefits coverage over the fines for not, but the requirement exists because not enough people would sign up for coverage without it. This effort is just in California, of course, but even still, it's telling that one of the biggest exchanges in the nation is turning its focus this way. 

Even still, there are limits. In November, at the beginning of this enrollment period, Gallup found that a little more than a third of the uninsured would prefer to pay the penalty rather than sign up for coverage. 

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  1. ” the “shared responsibility payment,””

    Evidently we share the responsibility of enriching the corrupt insurance industry.

    1. Well you can’t really expect them to payoff all those politicians without some help!

  2. “This effort is just in California, of course, but even still, it’s telling that one of the biggest exchanges in the nation is turning its focus this way.”

    People aren’t being bamboozled into accepting a bad deal, so they must be forced.

    1. What is bamboozling,is that like malarkey?

    1. No need to repeal. Oral arguments in King v Burwell in March, subsidies stop soon thereafter.

      1. Look, kill it with fire, whatever. I don’t really care about the form of the Destructor.

        1. Great, now we will have a 200 foot tall STEVE SMITH…

  3. They have a billion of these ads for the Colorado exchange going on. None of them currently mention the penaltax outright, but if you listen closely they say things like “It’s your responsibility”- just like talking about registering for selective service- which I imagine is to get you to say, “Oh yeah I’m gonna get gooned upon if I don’t do this”.

  4. On my new compliant plan as of this month. Already got my first “We don’t take that insurance”

  5. Despite all these problems and all the costs that people will have to deal with, Obamacare was totally, 100% worth it (so Gruber could get his $400k).

  6. Yeah, well – fuck California.

    1. It’s a national law not just California. Did you really not know that?

  7. Yep, IRS shows up with guns shortly if your medical insurance isn’t as it should be. Much less concerning that KULTUR WARZ, amirite? Also, something something gay marriage something something Mexicans something pot.

    What a fucked up country. It’s been a damned shame to watch it move from “not-quite-so-fucked-up” to “WAIT-A-MOTHERFUCKING- MINUTE-HOW-DID-THIS-HAPPEN?!”

    1. ^Couldn’t fucking agree with this more.

      1. Hey, you wanna get high?


  8. Well, I guess that’s liberal progress for you: they complained that insurance was expensive and now, after they “fixed” things, NOT having insurance is expensive.

    1. Je suis Amish!


  9. Whoa whoa whoa, wait a minute.

    I thought President Not My Fault got free healthcare for those who can’t afford it? That’s what all my liberals friends told me.

    1. Things become more affordable with you’re threatened with fines and/or imprisonment.


        Freedom! USA! USA! USA!

          1. Uncle Milty just spun a little in his grave.

  10. “This year, a family of four earning $70,000 a year could pay close to $1,000 in their taxes if they remain uninsured in 2015.”

    Aw, big whoop. I can’t find coverage for a family of four for $1000 a Month! What’s to keep people from gaming the system and paying the penal tax (which sucks) rather than $12K+ plus deductibles per year?

    1. The ObamaCare premium for a $6000 deductible policy for my wife and me last year was only $999/month. For 2015, it only went up to $1276/month.

      Even better, my 59 year-old wife gets free birth control and, if she gets pregnant, our children will get free pediatric dental insurance.

      So what are you guys complaining about? All I can say is, “Thanks, Obama! And, you too, Pelosi!”

      1. Speaking of pediatric dental insurance, my neighbor, a pediatric dentist to whom all the dentists in my town send their tough pediatric cases was forced to purchase pediatric dental insurance for her kids. She was pissed.

        1. That’s so she can bill herself for working on her own kids’ teeth, then send the bill to insurance to be paid from the fines levied against people who see Obamacare for the BS it is.

  11. For folks with modest incomes, the marginal tax rate can be several hundred thousand percent.

    A married couple, both spouses aged 64 with household income of 399.99% of Federal poverty level, would receive a subsidy of $9220 on average according to the Kaiser Family Foundation’s ObamaCare calculator.

    If they earn about one dollar more than that, they lose the entire subsidy … which is effectively a marginal tax rate of about 922,000%.

    I pity the fool whose overtime caused his family income to just barely cross the 400% threshold.

    1. The effective marginal ObamaCare tax rate at 400% of Federal poverty level varies significantly by age.

      Age 30 Zero
      Age 40 62400%
      Age 50 325700%
      Age 60 806700%

  12. The fine is 10 times cheaper than the cheapest plan this year, and 5 times cheaper next year…I’ll go without

  13. ObamaCare: A collection of ideas that are so fucking awesome that they had to be made mandatory. . .

  14. I am so glad to be 70.

    1. So we agree that a universal single-payer system would have been better than the current patchwork of private plans that make up obamacare?

      1. If you think it’s expensive now…talk to the governor of Vermont.

        1. I took MSimon’s comment that he is glad to be 70 (in the context of this thread) to mean that he prefers Medicare to Obamacare.

  15. So what’s with the US 66 sign? Does Reason want to roll history back to 1974 or further?

  16. I think that people will soon clearly understand the cost of being not only unsecured, but also unprotected by the government. The laws are getting more and more weird and unfordable. The level of unemployment is just growing and the government do nothing about this. There is one benefit ? the low oil price, but it is not for so long, because the politicians want to rise the gas tax, so people will not feel the deference. I think that today the only available service offered by online payday loans Canada website can help people to make ends meet.

  17. Grandfather Gardner, ‘papa’, to the family, liked to say,” equal sufferage, so that we all suffer equally.” Born in 1895, flew for the Army Air core in WWI , and watched as the progressive mentality took hold in these United States to the demise of the Principles laid out in the Declaration of Independence and our Constitution. From the same generation, Churchill declared,” never, never, never give up.”

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