Personal income taxes: credits: health insurance premiums.
The enactment of AB 2459 would directly amend state taxation laws to include a new section that provides financial relief to individuals facing high health insurance premiums. By establishing this credit, the bill aims to reduce financial strain on low- to modest-income earners, particularly those who fall between the 400% to 600% thresholds of the federal poverty level. This move could alleviate economic pressures and enhance accessibility of health care, aligning with broader goals of affordable health insurance statewide. The Franchise Tax Board would be tasked with overseeing the implementation and effects of this credit, reporting on its usage, effectiveness, and overall impact on health care costs by January 1, 2024.
Assembly Bill 2459, introduced by Assembly Member Friedman, seeks to provide a tax credit to qualified individuals in California for health insurance premiums that exceed a designated percentage of their income. Specifically, for tax years beginning on or after January 1, 2019, and before January 1, 2026, the bill proposes a credit under the Personal Income Tax Law. This credit would cover the cost of the lowest cost bronze plan for individuals certified by Covered California, if their premiums exceed 8% of their modified adjusted gross income. Essentially, the intent of this legislation is to ensure that individuals purchasing their own health care coverage do not spend more than 8% of their income on premiums, providing a significant benefit to those who may be experiencing high health insurance costs.
The sentiment surrounding AB 2459 appears to lean positive among supporting legislators and advocacy groups focused on healthcare affordability. Proponents argue that the bill is a significant step towards ensuring that individual market purchasers are not overwhelmed by the cost of essential health insurance. However, there may be some contention regarding the appropriateness of providing public funds for tax credits when some argue for broader health care reforms. Nonetheless, the focus remains largely on reducing barriers to health insurance access for lower-income Californians.
Notable points of contention may arise regarding the specific income thresholds established for eligibility and the potential implications of the credit on state tax revenues. Critics may question whether the credit effectively addresses the underlying issues of high healthcare costs or if it merely serves as a temporary band-aid. Additionally, the bill will be time-limited, set to expire in 2026 unless further legislative action is taken, which could lead to future discussions on sustainability and cost-effectiveness of such tax credits in the long term.