Recently, we’ve begun to hear and see ads on the radio, TV, and billboards about Covered California’s open enrollment. In a move that has become more prevalent in California state government, at a meeting on November 14, Covered California stated that they would take a “positive approach” to California’s new requirement for all residents to have health insurance. This approach means they are including only minimal information about the penalty for failing to have health insurance in their marketing efforts.

With the federal penalty at $0, how are Californians to know that they will pay a penalty — if they don’t qualify for one of the exemptions?

In the November 14 meeting with the FTB and Covered California, it was stated that 93% of individuals in California are already covered by insurance. Of the remaining subset of 7%, approximately 2.7 million, many will qualify for an exemption. Unfortunately, many will not qualify for an exemption and, thinking that they won’t pay for a lack of health insurance because of the repeal of the federal penalty, they will be rudely awakened when they file their state tax returns for 2020.

Although we don’t have a figure for Covered California, the FTB was given a budget of $8.232 million for implementation of the mandate and associated subsidy and penalty provisions. This would include form development, processing and other procedures, regulations, implementation, and marketing. The FTB has done the following:

  • Worked on a brochure that provides definitions, explanations, and timelines for the program, including the penalty; and
  • In partnership with the EDD, will notify employers of the potential penalty for employees with no health insurance. Note: These employers may or may not pass the information along to their employees.

Covered California and the FTB worked together to create a letter to about 900,000 households that they have identified as having no health insurance, but it’s unclear how many individuals will receive no notification at all.

However, brochures and letters will not get the saturation of the massive ad campaign put on by Covered California. We are a society who gets their news through television, radio, and social media, not letters and brochures.

A demand for transparency

After we voiced our concerns, the FTB informed us that some of the Covered California ads mention the penalty … but if it is mentioned, it is not emphasized.

In an interview with NBC’s Conan Nolan, when asked about the penalty, Peter Lee, Executive Director of Covered California, stated that the penalty could be more than $2,000 for a family of four and goes up with higher income. He then said that the real penalty was going into the ER and leaving with an $80,000 bill. He next talked about health plans lowering the rates because more people have insurance.

In a public service bulletin, the penalty is briefly mentioned but not highlighted.

As a result of our demand for clear transparency, Covered California has indicated they will start putting more emphasis on the penalty so people aren’t blindsided.