California’s health mandate penalty and coverage of immigrants in the state illegally, explained

A leader of a student group that supports President Donald Trump claimed that California is "putting illegals first" when it comes to health care.

"Starting January 1, 2020, California will tax legal citizens if they don’t have health insurance. Why? The state needs to come up with $98,000,000 to pay for free health insurance for illegal aliens. Why do Democrat’s (sic) keep putting illegals first?" tweeted Ryan Fournier, founder and co-chairman of Students for Trump.

A screenshot of the tweet was posted on Facebook Oct. 21. The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)

Fournier told PolitiFact his claim was based on two June articles, one from a TV station in Los Angeles and the other from USA Today. The KTLA article said the California legislature voted to tax Californians who don’t have health coverage starting Jan. 1, 2020. The USA Today story said California would become the first state to offer health coverage to low-income adults living illegally in the country and that the plan would cost $98 million.

Overall, the state does plan to impose a tax penalty on people without health care insurance, and it also plans to expand coverage for immigrants living illegally in the state. But the two moves aren’t directly related. Revenues from the tax will go toward subsidies to help Californians reduce the cost of their health care coverage. Other revenues are being used to pay for health care for unauthorized immigrants.

A new mandate in California, effective Jan. 1, 2020, will require Californians to have health insurance throughout the year. Californians who don’t have health coverage in 2020 — and who don’t qualify for exemptions — would have to pay a penalty in 2021 when they file their 2020 state income tax return. The requirement is modeled after the individual mandate that was included in the federal Affordable Care Act, but effectively eliminated by Congress after Trump took office.

California’s penalty is expected to generate about $317 million beginning in 2020-2021, said an Oct. 17 report from the Legislative Analyst’s Office, the California legislature’s nonpartisan fiscal and policy advisor.

Those revenues will help offset the cost of new state subsidies that will be available to Californian households with incomes up to 600% of the federal poverty level, said the report. The subsidies were created to help households reduce the cost of health care coverage bought through the state’s health insurance marketplace, Covered California.

"To the extent that any penalty is collected, all of that money is going to fund additional affordability assistance in Covered California," said Anthony Wright, executive director of Health Access California, a health care consumer advocacy coalition. 

The subsidies will go "to legally residing Californians up and down the income stream, including those above 400% of the poverty level that otherwise would not qualify for assistance," Wright said.

The vast majority of the new subsidies will benefit Californians with incomes between 400% and 600% of the poverty line, said Scott Graves, director of research for California Budget and Policy Center. "These residents — unlike people with lower incomes — do not qualify for any federal financial assistance even though they often face high monthly premiums as well as large out-of-pocket costs," Graves said.

The new state subsidies sunset after 2022, but the mandate and related penalty will continue.

Featured Fact-check

Tim Sheehy

stated on September 27, 2024 in an ad

U.S. Sen. Jon Tester “voted to give taxpayer-funded health care to illegal immigrants."

Covered California’s website said that immigrants not lawfully present in the United States do not qualify for a health plan through Covered California (though they may qualify for the state’s Medicaid program, Medi-Cal).

Another portion of California’s 2019-20 budget expands health coverage for young adults in the country illegally.

Medi-Cal, funded by state and federal taxes, offers free or low-cost health care coverage for low-income children and adults in California. The state has "restricted scope" and "full-scope"  Medi-Cal; the restricted version covers emergency and pregnancy-related services, and the full-scope is more comprehensive, including medical, dental and eye care.

California in 2016 began offering full-scope Medi-Cal to all children under 19 years old, regardless of immigration status. 

This year, the state expanded full-scope Medi-Cal to adults 19 to 25 years old who are illegally in the country and meet the income requirements. In 2019-20, this expansion is expected to cost California about $98 million, with an estimated $74 million coming from the state’s general fund. The state funds will support the full-scope Medi-Cal services ineligible for federal aid, Graves said.

The additional funding, beyond the approximately $74 million from the state’s general fund, will come from the federal government and be used to pay for emergency and pregnancy-related services, he said.

"As with the prior expansion, the general fund cost of this new expansion will be paid for with tax revenues that are generated by California’s current tax system, with no tax increase," Graves said. Almost all tax revenue that flows into the state’s general fund comes from the personal income tax, the sales and use tax, and the corporation tax, he said.

The Legislative Analyst’s Office projected that on an ongoing basis, the Medi-Cal expansion for young adults would increase general fund spending by around $225 million annually across the Medi-Cal and In-Home Supportive Services program. The full-scope expansion is expected to benefit about 100,000 people.

Some California state lawmakers and immigrant advocates wanted to offer health coverage to all immigrants living illegally in the state, but those broader plans were curtailed during budget negotiations. California’s budget has a surplus of more than $20 billion.

Our ruling

Fournier said, "Starting January 1, 2020, California will tax legal citizens if they don’t have health insurance. Why? The state needs to come up with $98,000,000 to pay for free health insurance for illegal aliens."

Californians will be required to have health care coverage in 2020, and if they don’t, they’ll pay a tax when they file their state income taxes in 2021. (There are some exemptions.)

Revenue from the penalty will be used to pay for subsidies that will become available to Californians to help them reduce the cost of health care coverage. The subsidies will be for Californians who buy insurance through Covered California, the state’s health insurance marketplace. Immigrants in the country illegally are not allowed to purchase insurance through Covered California.

California in 2020 will also expand health care coverage for young adults in the country illegally with low income. That’s estimated to cost around $98 million in the first year, drawing about $74 million from the state’s general fund. 

Fournier’s statement is partially accurate but leaves out important details or takes things out of context. We rate it Half True.