Like a number of other states in the nation, California has their own requirements for mandatory healthcare coverage. In fact, according to the commonwealthfund.org, in the following states, residents may have to pay a tax penalty for not having health insurance:
- New Jersey
And, if you were under the impression that living in California meant that you no longer were under the federal individual healthcare mandate like the other 45 states in the U.S, that is no longer the case.
What Happened to the Obamacare Individual Mandate?
This mandate was established in the Affordable Care Act (ACA) which took effect on January 1, 2014. The requirement of the ACA is that most citizens and legal residents of the United States have health insurance.
In prior years, if you went without Affordable Care Act (ACA) compliant health insurance for more than two months, you would have to pay a significant tax penalty.
According to Kaiser Health News, the penalty for going without health insurance for last year, 2018, had increased to $695 per uninsured adult, or 2.5% of your income, whichever amount was higher.
However, the current presidential administration brought a number of changes. Among these was the federal tax penalty for not being enrolled in health insurance, which was eliminated for tax year 2019. While the penalty was not actually repealed, contrary to how it is described in a number of articles and posts, the dollar amount was reset to $0, which effectively eliminated any penalty for the tax year 2019.
Keep in mind, however, if you received a penalty for not having health insurance for any period longer than two months in 2018, you will still have to pay the penalty on your 2019 tax forms if it was not paid already or is waived by the IRS.
That 2018 federal tax penalty is $695 for adults and $347.50 for children, or 2.5% of your yearly income, whichever amount is higher. This works out to a total penalty of $2,085 for a typical family of four.
What’s New for California Health Insurance in 2020
California approved its own individual health insurance mandate (2019 Ch. 38, SB 78) on June 27, 2019, which requires state residents to maintain minimum essential coverage for bptj themselves and their dependents starting on January 1, 2020, or pay a state tax penalty.
The mandate requires Californians to have qualifying health insurance coverage throughout the year. The legislation also established a three-year program to provide additional state subsidies to help qualifying households purchase coverage through Covered California.
The subsidy program that California passed extends the premium subsidy to 600% Federal Poverty Level (FPL) for three years beginning in 2020. In essence, the state will pick up where the federal government leaves off in terms of healthcare premium subsidies.
This means that individuals earning up to close to $75,000 a year, and families of four making as much as $154,500 a year, will be eligible for some amount of subsidy to help them afford their monthly premium.
An Individual Mandate Means Mandatory Healthcare Coverage
While healthcare coverage advocates and other proponents of mandated healthcare were happy with the new law, others were not so pleased. However, most California residents already have qualifying health insurance coverage with employer-sponsored plans, coverage through Covered California or directly from insurers, along with Medicare and most Medi-Cal plans.
Under the new mandate, those who fail to maintain qualifying health insurance coverage could face a financial penalty unless they qualify for an exemption. With some exceptions, a taxpayer who fails to obtain healthcare coverage will be subject to a penalty when they file their 2020 state income tax return in 2021. The penalty for a dependent child is half of what it would be for an adult.
To avoid a penalty, California residents need to have qualifying health insurance for themselves, their spouse or domestic partner, and their dependents for each month beginning on January 1, 2020.
Key 2020 Open Enrollment dates
- Open Enrollment for Covered California begins on October 15, 2019 and continues until January 31, 2020.
- The 2020 Open Enrollment Period for private insurers runs from Friday, November 1, 2019, to Sunday, December 15, 2019.
- If you don’t act by December 15, you can’t get 2020 coverage unless you qualify for a Special Enrollment Period.
- Plans sold during Open Enrollment start January 1, 2020.
Getting Health Insurance Coverage In California
Take time to understand the basics of healthcare insurance coverage and how Covered California can save you money. A qualified insurance agent, like JC Lewis Insurance Services can help you choose a plan that provides the benefits and coverage you really need.
Because of the Affordable Care Act (ACA) you can no longer be denied health insurance coverage due to a pre-existing health condition and you can’t be denied benefits due to pre-existing exclusion periods.
There are a number of resources to help you learn about Covered California and health insurance plans in California such as the California Department of Insurance and Healthcare.gov, along with seeking out resources from a good agent like JC Lewis Insurance Services.