Tax professionals Health care mandate

Here’s more information about the state healthcare mandate that may interest tax professionals.

Outreach to the public

We’ve partnered with Covered California to ensure the public is aware of the healthcare mandate. Covered California has already been running TV and radio ads urging people to get coverage and take advantage of financial assistance. We also have several other outreach efforts planned, including news releases, media interviews, social media, etc.

Subsidies

New state subsidies are available for the first time. Review Covered California’s news release from December 12, 2019, for more information.

How they work

Covered California will administer the subsidies. Taxpayers who obtain health insurance from Covered California may qualify for state subsidies based on their projected annual income.  They will receive the subsidies in the form of reduced cost of monthly premiums, which will be reconciled on their state tax returns. If a taxpayer’s employer is offering health coverage, they may not be eligible for subsidies.

Penalties

California residents who do not have coverage for themselves and their dependents in 2020, and who do not qualify for an exemption, will pay a penalty of $750/adult or more and $375/minor, or 2.5% of their or gross income over the filing threshold for their filing status, whichever is higher. The penalty for a married couple without coverage can be $1,500 or more and the penalty for a family of four with two dependent children could be $2,250 or more.

Gap coverage

A short gap coverage exemption will apply for taxpayers who did not have coverage for 3 consecutive months or less. (The federal short gap coverage exemption was for not having coverage less than 3 consecutive months.)