california healthcare mandate

Beginning January 1, 2020, California will impose penalties generally equal to $695 per adult against California residents who do not have minimum essential healthcare coverage for the entire year.  The penalty for a dependent child is half of what it would be for an adult.

A typical family of four or more persons that goes uninsured for the entire year would face a penalty of at least $2,000.  However, for higher income adults/households, the penalty can be as much as 2.5% of household income above certain thresholds, i.e., a household with $500,000 of household income can face a penalty nearing $10,000.

If you do not have adequate health insurance coverage during the 2020 tax year, then the penalty will be imposed.  This penalty would not have to be paid until you file your 2020 tax return.

If you do not have health insurance through your employer, then you can sign up for health care coverage online through Covered California (www.coveredca.com) until January 31, 2020 during the Annual Open Enrollment Period.

Subsidies Available
California is providing subsidies to assist taxpayers who purchase health care coverage through the Covered California website.  Subsidies are available to people whose household income is at or below 600% of the federal poverty threshold (600% of the federal poverty threshold is equal to $74,940 for a single person, and up to $154,500 for a family of four).

Exemptions
Many taxpayers can avoid the penalty if they qualify for an exemption from the requirement to obtain health insurance coverage.  Common exemption examples include, but are not limited to:

  • Coverage is unaffordable (you must meet specific requirements);

  • You’ve experienced a severe hardship (e.g., homelessness, eviction, bankruptcy, domestic violence, illness or death in the family, etc.); or

  • You have a short-term coverage gap (three months or less) due to switching jobs

Most exemptions are the same as those that applied under the federal Affordable Care Act.
Please contact our office if you have any questions as to whether you might qualify for an exemption.

Although this new healthcare mandate will not impact the filing of your 2019 tax return, make sure to get coverage as soon as possible to avoid the penalty when we file your 2020 return.  Open Enrollment through Covered California ends January 31, 2020.

For more information on the new California Healthcare Mandate and access to a Penalty Estimator, please Click Here.