Get health care coverage now to avoid state penalty later
For Immediate Release
Sacramento – The Franchise Tax Board (FTB) today urged Californians to get health care coverage now and keep it through 2020 to avoid a penalty when filing state income tax returns in 2021.
FTB is teaming up with Covered California to generate awareness about the new Minimum Essential Coverage Individual Mandate (Ch. 38, Stats. 2019), otherwise known as the individual health care mandate, which requires Californians to have health coverage effective January 1, 2020.
“We want to encourage everyone to secure health care coverage by year’s end, so they are not surprised with a state penalty in 2021,” said State Controller Betty T. Yee, who serves as chair of the FTB.
The individual health care mandate, patterned after the federal Patient Protection and Affordable Care Act, requires Californians to obtain and maintain qualifying health insurance coverage. Those who choose to go without coverage could face a financial penalty unless they qualify for an exemption.
Many people already have qualifying health insurance coverage, including employer-sponsored plans, coverage purchased through Covered California or directly from insurers, Medicare, and most Medicaid plans.
Covered California, the state’s health insurance marketplace, is administering the program by connecting Californians to the health insurance they will need along with financial assistance options. The current open enrollment period runs through January 31, 2020.
“This is a critical message for people because if they want to avoid that penalty when they file their taxes in 2021, they need to sign up for health care coverage now during open enrollment,” said Covered California Executive Director Peter V. Lee. “Covered California is the only place you can go to see if you qualify for financial help, including new state subsidies available to almost one million Californians, to help lower the cost of your coverage.”
Consumers who want their coverage to begin on Jan. 1, 2020, must sign up through Covered California by December 15.
FTB is responsible for administering the penalty and validating the reconciliation of financial assistance subsidies received through Covered California. Californians will need to verify they have minimum essential coverage or qualify for an exemption, or they will be subject to a penalty when they file their 2020 state income tax returns in 2021.
Generally speaking, a taxpayer who fails to secure and keep coverage will be subject to a penalty of $695 or more. The penalty for a dependent child is half of what it would be for an adult. The penalty for a married couple without coverage can be $1,390 or more, and the penalty for a family of four with two dependent children could be $2,085 or more.
FTB administers two of California’s major tax programs: Personal Income Tax and the Corporation Tax. FTB also administers other non tax programs and delinquent debt collection functions, including delinquent vehicle registration debt collections on behalf of the Department of Motor Vehicles, and court–ordered debt. Annually, FTB’s tax programs collect more than 70 percent of the state’s general fund. For more information on other taxes and fees in California, visit: taxes.ca.gov.