Bill Text: CA AB174 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Health care.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2019-10-12 - Chaptered by Secretary of State - Chapter 795, Statutes of 2019. [AB174 Detail]

Download: California-2019-AB174-Amended.html

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Amended  IN  Assembly  March 27, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 174

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Introduced by Assembly Member Wood

January 08, 2019

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An act to add Section Sections 100504.1 and 100504.2 to the Government Code, and to add Section 17052.10 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. relating to health care coverage.

LEGISLATIVE COUNSEL'S DIGEST

AB 174, as amended, Wood. Personal income taxes: credits: health insurance premiums. Health care coverage: financial assistance.

Existing federal law, the Patient Protection and Affordable Care Act (PPACA), requires each state to establish an American Health Benefit Exchange to facilitate the purchase of qualified health benefit plans by qualified individuals and qualified small employers. PPACA defines a “qualified health plan” as a plan that, among other requirements, provides an essential health benefits package. Existing state law creates the California Health Benefit Exchange, also known as Covered California, to facilitate the enrollment of qualified individuals and qualified small employers in qualified health plans as required under PPACA. Existing law specifies the powers of the Exchange’s executive board, including the power to assist in the administration of subsidies for individuals with coverage made available through the Exchange.

This bill would require the board to administer enhanced premium assistance to individuals with household incomes below 400% of the federal poverty level, reduce premiums to zero for individuals with household incomes at or below 138% of the federal poverty level, reduce premiums for individuals with household incomes at or between 401% and 800% of the federal poverty level and who are ineligible for federal advanced premium tax credits so their premiums do not exceed a specified percentage of their household incomes, and administer specified additional cost-sharing financial assistance for individuals with household incomes below 400% of the federal poverty level and who are eligible for premium tax credits.

The Personal Income Tax Law allows various credits against the taxes imposed by that law.

This bill, for each taxable year beginning on or after January 1, 2020, would allow a credit under the Personal Income Tax Law in an amount equal to the cost of health insurance premiums of the lowest cost bronze plan for the qualified individual, certified by the board of Covered California, or the qualified individual’s dependent that exceeds 8%, but no more than ____%, of the qualified individual’s modified adjusted gross income, as specified. The bill would, for a taxpayer with an allowable credit in excess of tax liability, allow a payment to the taxpayer in excess of that credit amount, upon appropriation by the Legislature, subject to the annual Budget Act or a bill providing for appropriations related to the Budget Act, as provided. The bill would require, on or before January 1, 2024, the Legislative Analyst’s Office to report on the number of qualified individuals who claimed the credit, the average and median credit amounts claimed, and the effectiveness of the credit in reducing health care costs.

This bill would take effect immediately as a tax levy.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 100504.1 is added to the Government Code, to read:

100504.1.

 (a) The Legislature finds and declares all of the following:

(1) Although Covered California provides financial assistance for premiums, financial help to reduce copays and deductibles, and other cost sharing, many low- and moderate-income Californians who receive that financial help still have difficulty paying their premiums, obtaining access to care, or affording the necessities of life, such as food and housing.

(2) Under existing federal law, most Californians are assured that their health insurance premiums will cost no more than 10 percent of their incomes, but some Californians who buy coverage as individuals may still face health insurance premiums that cost far more than 10 percent of their incomes.

(3) There are still over 1,000,000 Californians in the individual market who remain uninsured because they cannot afford health care coverage due to high health care costs and the high cost of living in this state.

(b) It is the intent of the Legislature that a California taxpayer who buys coverage as an individual shall not spend more than 15 percent of the taxpayer’s income on health care coverage premiums that meet minimum standards of affordability.

(c) It is further the intent of the Legislature that the total uninsured population in the individual market shall be reduced by one-half because more Californians will have more affordable coverage.

SEC. 2.

 Section 100504.2 is added to the Government Code, to read:

100504.2.

 (a) (1) The board shall administer enhanced premium assistance to an individual who enrolls in health care coverage through the Exchange.

(2) For an individual with a household income at or below 138 percent of the federal poverty level, the enhanced premium assistance shall reduce the individual’s premiums to zero.

(3) For an individual with a household income at or between 139 percent and 400 percent of the federal poverty level, the enhanced premium assistance shall be scaled to reduce the individual’s premiums to 1 percent of the individual’s household income for an individual with a household income of 139 percent of the federal poverty level to 8 percent of the individual’s household income for an individual with a household income of 400 percent of the federal poverty level.

(4) For an individual with a household income of 401 percent or more of the federal poverty level who is not otherwise eligible for federal advanced premium tax credit, the enhanced premium assistance shall reduce the individual’s premiums to 8 percent of the individual’s household income for coverage with an actuarial value of 70 percent with respect to essential benefits for an individual with a household income of 401 percent of the federal poverty level, scaled to reduce the individual’s premiums to 12 percent of the individual’s household income for an individual with a household income of 600 percent of the federal poverty level, and scaled to reduce the individual’s premiums to 15 percent of the individual’s household income for an individual with a household income of 800 percent of the federal poverty level.

(5) The enhanced premium assistance shall be in addition to applicable federal tax premium subsidies and shall not replace those subsidies.

(b) The board shall administer additional cost-sharing financial assistance to those who are otherwise eligible for premium tax credits and who have incomes determined to be below 400 percent of the federal poverty level as follows:

(1) An individual with a household income at or below 138 percent of the federal poverty level shall be offered products with an actuarial value of 100 percent with respect to essential benefits.

(2) An individual with a household income at or between 200 percent and 400 percent of the federal poverty level shall be offered products with an actuarial value of 80 percent with respect to essential benefits. The benefit design for these products shall be consistent with the benefit design for a gold level of coverage.

(c) For purposes of this section, “cost-sharing financial assistance” includes direct assistance with copays and deductibles.

SECTION 1.Section 100504.1 is added to the Government Code, to read:

100504.1.

(a)In addition to the other requirements of this title, the board shall certify qualified individuals for purposes of the credit allowed by Section 17052.10 of the Revenue and Taxation Code. The board shall provide the certification to both the qualified individual and the Franchise Tax Board.

(b)The board shall certify the following:

(1)The individual’s name and address.

(2)The individual’s social security number or taxpayer identification number.

(3)Whether the individual is a qualified individual.

(4)The cost of the second lowest bronze plan available to the qualified individual for the calendar year in excess of 8 percent of the qualified individual’s estimated adjusted gross income.

(5)The date of enrollment or renewal of coverage.

(6)The calendar year for which the coverage is obtained.

(c)For purposes of this section:

(1)“Bronze plan” has the same meaning as “bronze level,” as defined in Section 1367.008 of the Health and Safety Code.

(2)“Dependent” has the same meaning as in subdivision (b) of Section 1399.845 of the Health and Safety Code.

(3)“Individual market” means an individual market described in either Article 11.8 (commencing with Section 1399.845) of Chapter 2.2 of Division 2 of the Health and Safety Code or Chapter 9.9 (commencing with Section 10965) of Part 2 of Division 2 of the Insurance Code.

(4)“Public programs” has the same meaning as an applicable state health subsidy program in Section 1413(e) of the federal Patient Protection and Affordable Care Act (Public Law 111-148).

(5)(A)“Qualified individual” means a person who purchased health care coverage in the individual market for himself or herself or for a dependent, if that coverage is a standardized benefit design approved by Covered California pursuant to subdivision (c) of Section 100504 of the Government Code, whose household income is 400 percent to 600 percent, inclusive, of the federal poverty level, and who is not an applicable taxpayer under Section 36B(c)(1) of the Internal Revenue Code, relating to an applicable taxpayer.

(B)A “qualified individual” does not include an individual who, or whose dependent for which the credit is claimed, is otherwise eligible for minimum essential coverage through employment, Medicare, Medicaid, or other public programs. For purposes of this subparagraph, “minimum essential coverage through employment” means affordable employer coverage of minimum value, as provided in the federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), and any rules and regulations promulgated thereunder.

(6)“Standardized benefit design” has the same meaning as a standardized product described in subdivision (e) of Section 1366.6 of the Health and Safety Code.

(d)Any necessary rules and regulations may be adopted by the board as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2). The adoption of emergency regulations pursuant to this section shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare.

SEC. 2.Section 17052.10 is added to the Revenue and Taxation Code, to read:

17052.10.

(a)(1)For each taxable year beginning on or after January 1, 2020, there shall be allowed to a qualified individual a health insurance premium credit against the “net tax,” as defined by Section 17039, in an amount determined pursuant to paragraph (2).

(2)The credit shall be equal to the cost of health insurance premiums of the lowest cost bronze plan for the qualified individual or the qualified individual’s dependent that exceeds 8 percent, but no more than ____ percent, of the qualified individual’s modified adjusted gross income.

(3)The credit shall be claimed on a return filed for the taxable year in which the health insurance premium was purchased, regardless of the year in which the health insurance plan is operative.

(b)For purposes of this section:

(1)“Bronze plan” has the same meaning as “bronze level,” as defined in Section 1367.008 of the Health and Safety Code.

(2)“Lowest cost bronze plan” means the lowest cost bronze plan available to the qualified individual or the qualified individual’s dependent, given the age and geographic region of the individual covered by the health care coverage.

(3)“Modified adjusted gross income” has the same meaning as in Section 36B(d)(2)(B) of the Internal Revenue Code, relating to modified adjusted gross income.

(4)“Qualified individual” means a person who received a certification from the board of Covered California pursuant to Section 100504.1 of the Government Code.

(c)(1)If the amount allowable as a credit under this section exceeds the tax liability computed under this part for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, subject to paragraph (2), shall, upon appropriation by the Legislature, be refunded to the taxpayer.

(2)Unless otherwise specified in the annual Budget Act or in any bill provided for appropriations related to the Budget Act, the amount paid to the taxpayer pursuant to this subdivision is zero dollars ($0).

(d)The California Health Benefit Exchange, known as Covered California, pursuant to Title 22 (commencing with Section 100500) of the Government Code, shall be the certifying agency of the provisions of this section.

(e)Nothing in this section shall be construed to prohibit a qualified individual who purchases a health insurance premium other than the lowest cost bronze plan from receiving the credit.

(f)Section 41 does not apply to the credit allowed by this section.

(g)Notwithstanding Section 10231.5 of the Government Code, on or before January 1, 2024, the Legislative Analyst’s Office shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, on the number of qualified individuals who claimed the credit, the average and median credit amounts claimed, and the effectiveness of the credit in reducing health care costs.

(h)(1)The Franchise Tax Board may adopt regulations necessary or appropriate to carry out the purposes of this section, including any regulations to prevent improper claims from being filed or improper payments from being made. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

(2)The adoption of any regulations pursuant to paragraph (1) may be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, these emergency regulations shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State, and shall remain in effect until revised or repealed by the Franchise Tax Board.

SEC. 3.

This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.