IfNewsom's $295 million plan is enacted, California would be thefirst state to offer financial aid to middle-class families whohave shouldered the full cost of premiums themselves. (Photo:Shutterstock)

Claire Haas and her husband are at a health insurancecrossroads.

If they were single, each would qualify for a federal tax credit to help reduce the cost oftheir health insurance premiums. As a married couple, they getzip.

“We talk about getting divorced every time we get our healthcare bills,” said Haas, 34, of Oakland, Calif. She has been marriedto her husband, Andrew Snyder, 33, for two years.

Related: Pay cuts, other strategies middle-class earners useto afford health care

“We kind of feel like we messed up. We shouldn't have gottenmarried.”

The couple pays about $900 in monthly premiums — which adds upto about 14 percent of their annual income, said Haas, aself-employed leadership coach and consultant. Snyder is an adjunctprofessor of ethnomusicology.

Under a proposal by Gov. Gavin Newsom, an estimated 850,000Californians could get help paying their premiums, including peoplelike Haas and Snyder, who together make too much to qualify forfederal financial aid but still have trouble affordingcoverage.

To pay for the health insurance tax credits, the Democraticgovernor is proposing a tax penalty on Californians who don't havehealth insurance — similar to the unpopular federal penalty the Republican-controlled Congress eliminated,effective this year.

If Newsom's $295 million plan is enacted, California would bethe first state to offer financial aid to middle-class families whohave shouldered the full cost of premiums themselves, often wellover $1,000 a month.

“This is a gap in the Affordable Care Act, but there's been noaction at the federal level,” said Matthew Fiedler, a fellow withthe USC-Brookings Schaeffer Initiative for Health Policy.

Democrats in Congress introduced legislation this year to expand the federal subsidy to more people, butthose efforts have stalled in the past in the face of Republicanopposition.

In California, legislators are debating Newsom's penalty and taxcredit proposals as part of budget negotiations, which must bewrapped up by June 15. Democrats control the legislature, butRepublicans and taxpayer groups are opposed to the proposedpenalty, saying people should have a choice about whether to buyinsurance.

“It's a very costly and regressive tax on young people who can'tafford it,” said David Wolfe, legislative director of the HowardJarvis Taxpayers Association. “They likely aren't going to getsick, and they want to take that chance.”

Three other states — Massachusetts, New Jersey and Vermont — andthe District of Columbia already have adopted state healthinsurance requirements. Health experts say these mandates encourageyoung, healthy people to buy coverage alongside older, sicker — andmore expensive — enrollees.

If lawmakers approve a state tax penalty, modeled after thenow-defunct ACA mandate, some Californians could owe thousands of dollars if they fail to buy insurance.

“Without the mandate, everybody's premiums go up,” Newsom saidat an event in Sacramento in early May. “Every single person inthis state will experience an increase in their costs if we don'thave a diversified risk pool.”

Massachusetts and Vermont provide state financial aid tolow-income people who qualify for federal aid under the ACA,according to the USC-Brookings Schaeffer Initiative for HealthPolicy. Newsom wants to go a step further and give financial helpto middle-income earners — which could include families of fourearning up to about $154,500.

Under his proposal, 75 percent of the financial aid would go toabout 190,000 of these middle-income people who make between 400percent and 600 percent of the federal poverty level.That's between about $50,000 and $75,000 a year for an individualand between about $103,000 and $154,500 for a family of four.

Claire Haas and Andrew Snyder of Oakland would qualify forfederal financial aid to help pay for their health insurancepremiums if they were single, but as a married couple, they don'treceive any assistance. “We talk about getting divorced every timewe get our health care bills,” Haas said. (Courtesy of ClaireHaas)

The average household tax credit in this category would be $144per month, according to Covered California.

The remaining money would go toward tax credits for about660,000 people who earn between 200 percent and400 percent of the federal poverty level, or roughlybetween $25,000 and $50,000 for an individual and $51,500 and$103,000 for a family of four. The average household tax credit inthis category would be $13 a month, Covered Californiaestimated.

Exactly how much Californians could receive would vary dependingon where they live, their ages, incomes and family size, said PeterLee, Covered California's executive director.

For example, a couple, both 62, living in the San Francisco BayArea making $72,000 a year doesn't qualify for federal tax credits.They now pay a $2,414 monthly premium — or about40 percent of their income.

That couple could qualify for a $1,613 state tax credit underNewsom's proposal, lowering the cost of health insurance to about13 percent of their income, according to a CoveredCalifornia analysis.

By comparison, the ACAdefines an affordable employer-sponsored health plan as onethat costs about 9.5 percent or less of an employee'shousehold income.

California's high premium costs are among the biggest concernsmiddle-income customers raise with Kevin Knauss, an insurance agentin the Sacramento region.

“I have clients, especially those who are self-employed, whohave literally discussed the possibility of not working for two orthree months or stepping back from projects” so they can earn lessand qualify for federal tax credits, Knauss said.

Other insurance agents said they've met middle-income familieswho are willing to forgo insurance for one family member — oftenthe breadwinner — to bring down costs.

Alma Beltran, a small-business owner in Chula Vista, Calif.,doesn't have health insurance, and neither do her husband and17-year-old daughter.

Beltran knows it's a risk but said the premiums this year weresimply unaffordable: $1,260 a month for a plan with a whopping$13,000 deductible.

“I decided to let my business grow at the expense of my healthinsurance,” said Beltran, 53, who manufactures labels for the beerand wine industry. “This is the first year ever that I haven't hadhealth insurance.”

Such stories are why some lawmakers think Newsom's proposaldoesn't go far enough. For instance, some households wouldn'tqualify for a state tax credit until they spent a quarter of theirincome on premiums.

“We're still talking about a substantial portion of someone'sincome,” said state Sen. Richard Pan (D-Sacramento). “I appreciatethe governor's leadership, but I think that we do need tomore.”

The state Senate wants the governor to double the funding to about $600 million, not only by relyingon the penalty revenue but by dipping into the state general fund.California is projected to have a $21.5 billion budget surplus forbudget year 2019-20.

While Newsom said he supports giving consumers larger subsidies,he said his plan is fiscally responsible because it has a dedicatedrevenue source from the proposed health insurance penalty.

“Perfect's not on the menu, but better than any other state inAmerica is,” Newsom said.

Kaiser Health News isa nonprofit news service covering health issues. It is aneditorially independent program of the Kaiser Family Foundation,which is not affiliated with Kaiser Permanente.

Read more: 

• State-level insurance mandates could saveObamacare
• Maryland adds health insurance enrollment to taxfiling
• Public options in health care making entrance viastates