The window for many Californians to sign up for health coverage widened Friday when the state exchange said it would extend this month’s deadline to enroll in a plan until the end of April.
Covered California said it was making the change to accommodate taxpayers who are just now realizing that they’ll be charged penalties on their tax returns if they don’t have health insurance. This is the first year such penalties kick in under the federal health care law.
It’s too late for many uninsured people to avoid penalties for the 2014 tax year, but they still have time to head off much larger fines for 2015.
“We’re giving them an extended window,” said Covered California spokesman James Scullary. “We know this is all new for everybody.”
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As of this week, about 474,000 uninsured Californians had signed up for health insurance for 2015. Covered California had set a goal of enrolling half a million new subscribers this year.
The original deadline to enroll through Covered California was Feb. 15, but that was extended to Sunday for those who had already started the process. Friday’s announcement gave those who say they didn’t know about the tax penalty more than two more months to apply.
“To attest to this fact, they can select ‘Informed of Tax Penalty Risk’ when filling out an application at CoveredCA.com,” a news release from Covered California said. The website features a search function for local counselors and insurance agents who can help people enroll face to face.
The state’s special enrollment period runs from Monday to April 30. It could save many from having to write big checks to the Internal Revenue Service at tax time next year.
Under the federal Affordable Care Act, commonly called Obamacare, people who don’t have health care coverage – either through their employer, a government assistance program such as Medi-Cal, or a state or federal insurance exchange – will have to pay $95 or 1 percent of their adjusted gross income, whichever is greater, for 2014.
For the 2015 tax year, the penalty jumps to $325 per adult or 2 percent of a person’s income, with some exceptions for financial hardship. The penalty is called the “shared responsibility payment.”
Some people chose not to purchase health insurance through Covered California, despite federal subsidies in the form of tax credits, because of costs.
Officials are stressing that people can buy health insurance with income they might otherwise pay in tax penalties. A person making $40,000 a year who lacks insurance will pay a penalty of $300 with their 2014 taxes and $600 with their 2015 taxes, Covered California said.
“Instead of sending your money to the IRS, you can use it to provide protection and peace of mind for you and your family,” Scullary said.
The state extended its enrollment deadline on the same day that federal officials decided to create a special enrollment period from March 15 to April 30 for HealthCare.gov, the federal insurance exchange.
Anthony Wright, executive director of Sacramento-based Health Access California, said there were a number of reasons for setting up the extended enrollment periods rather than just creating a longer enrollment period in the first place. Officials, for example, wanted “to keep people focused on the deadline, but now that’s passed,” he said.
On Feb. 15 alone, about 36,000 people signed up for Covered California, officials said.
Last year’s crush of last-minute sign-ups crashed government websites and snarled phone lines. This year wasn’t nearly as bad but showed there are still problems to resolve, Wright said.
Many people received confusing notices telling them, for instance, to sign up for Covered California even though they already had coverage. The Covered California website was glitchy, and wait times on the phone were long, although both systems had been beefed up, he said.
“Even with all the improvements, there were still issues,” Wright said.
One snafu this year involved faulty tax forms sent to customers of the exchange.
On Friday, federal health authorities said about 800,000 taxpayers had received IRS 1095A forms with erroneous information. Those forms list information about the subsidies that help consumers pay for health insurance.
California authorities discovered a similar problem late last year and informed about 100,000 residents that they would be receiving updated tax information, Scullary said. The mix-up mainly had to do with the government and health plans having conflicting information, he said.
Government officials did not extend the sign-up period because of the incorrect tax forms, he said. The tax forms were sent to those already enrolled in Covered California; the extension helps those who haven’t enrolled.
But the events point out the stronger connection between health care and taxes under the Affordable Care Act’s approach of using tax credits and penalties to encourage people to buy insurance, officials said.
“For the first time, health care and taxes now are linked arm in arm,” Covered California Executive Director Peter V. Lee said in Friday’s news release.
Call The Bee’s Hudson Sangree, (916) 321-1191. The Associated Press contributed to this report.