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April 30 -- Last Chance to Avoid Tax Penalties for Failure to be Insured in 2015

When you filed your federal tax return for 2014 -- sometime before April 15, 2014 -- you may have realized for the first time that failure to have purchased health insurance in 2014 subjected you to a special tax penalty, known to tax lawyers as a "shared responsibility payment." Last year, 2014, was the first year for which tax penalties were assessed for failure to obtain health insurance. You will be assessed a similar penalty for the present tax year, 2015, unless you purchase insurance for this year. Normally, you would be required to purchase insurance by February 15 - the end of the open enrollment period for the year. However, if you can claim that you were not aware of the tax penalties until recently, applicable regulations extend that deadline and allow you to purchase insurance up to April 30, 2015.  

The tax penalties for not obtaining health insurance are significant, and they are going up in 2015. For example, a single person with income of $40,000, paid a penalty of about $300 in 2014, but in 2015 the penalty would be about $600. A married couple with two children and joint income of $70,000, paid a penalty of about $500 in 2014, but in 2015 the penalty would be almost $1,000. 

You can take advantage of this special extended enrollment opportunity through Covered California, the health insurance marketplace established by the State of California under the Affordable Care Act to make it easier for Californians to shop for, compare and purchase private health insurance. Depending upon your income, you may qualify for subsidies that will reduce the cost of health insurance to you and your family.

You have a number of insurance options available to you through Covered California. In general, you can purchase a bronze, silver, gold or platinum policy -- the bronze policies have lower co-pays and premiums, but also offer more limited coverage and higher deductibles. Platinum policies are more expensive and offer greater coverage. Silver and gold policies fall between. Depending upon where you live, you can purchase policies from the following private insurers on the Covered California marketplace: Anthem, Blue Shield, Chinese Community Health Plan, Health Net, Kaiser Permanente, LA Care, Molina Healthcare, Sharp Health Plan, Valley Health and Western Health Advantage.

If you do not wish to purchase insurance through Covered California, you may still take advantage of the extended enrollment period through April 30. Private insurers have been authorized to extend enrollment to April 30 (from the normal cut-off of February 15) to those Californians who had not been aware of the tax penalties for failure to purchase insurance. Insurers are not obligated to extend the standard enrollment period, but a number of them have, including Kaiser Permanente, Anthem, and Blue Shield. However, please note that if you qualify for subsidized health coverage, the subsidies are only available if you purchase your health policy on the Covered California market. 

Two additional quick notes: If you qualify for Medi-Cal, you may apply at any time. You are not subject to the April 30 - or any other -- application deadline. And if you are the subject of certain major changes in your life (for example, loss of health coverage through your employment, marriage, move to California), you may enroll in an insurance program after such event.

However, in all other circumstances, if you want to avoid paying a tax penalty when you file your taxes next year, take advantage of this special enrollment extension and purchase an eligible health insurance policy by April 30, 2015.

If you want to discuss your options or if you want help in selecting coverage that works for you and your family, please contact me.

Alex Pfeifer
Pfeifer Insurance Brokers
650 762-8070

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