How to Avoid Tax Penalties for Going Without Health Insurance In California (CA) & In Other Applicable States (NJ, DC, MA, RI, VT)

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How to Avoid Tax Penalties for Going Without Health Insurance In California (CA) & In Other Applicable States (NJ, DC, MA, RI, VT)

The January 2020 California health insurance mandate made changes to the requirements for health coverage in the state. Some residents still have questions about how to find private health insurance that satisfies the rules. When you understand the mandate requirements and potential penalties for failing to get sufficient coverage, your quest may become easier.

To best avoid penalties associated with the California laws, learn all the requirements your health insurance plan must comply with before you sign up. While most providers have automatically adjusted plans to meet the minimal essential coverage, you may want to do your own research to get appropriate insurance without excessive cost.

What Does the California Health Insurance Mandate Require?

The first thing to understand about these new laws that cover health insurance in CA is that every single person in the state must have coverage. This includes adults of all ages, students, teenagers, and children. There are no specific rules about where you get the insurance as long as it provides coverage of all types outlined in the new rules. This includes employer-sponsored plans, direct private coverage, and government facilitated programs like Medicare and Medicaid.

The California health insurance mandate follows the same rules for insurance coverage as the Affordable Care Act put in place on a federal level. This includes 10 coverage types:

  • Emergency medical services
  • Hospitalization
  • Preventative medicine and chronic disease help
  • Ambulatory patient services
  • Laboratory expenses
  • Pediatric medicine
  • Rehabilitation services and necessary medical devices
  • Gynecological and obstetric healthcare
  • Mental health and addiction services
  • Prescription drug coverage

The first and most important way to avoid penalties associated with the CA insurance mandate is to only choose a program and sign up for a plan that handles all of these things.

What Is the California Penalty for No Health Insurance?

Instead of direct fines payable to the state, failure to get appropriate health insurance in California will result in what is called an Individual Shared Responsibility Penalty. This involves a certain amount of money paid when you file your state tax returns. Adults need to pay a certain percentage based on their income and filing status. The parents or guardians of a minor child who does not have appropriate health coverage is 50% of the adult rate. The total amount you end up paying with your state taxes includes the total fine per person. Therefore, a family of two adults and two children, for example, will end up paying a large lump sum all at once.

The specific penalty for an individual or family depends on the rulings in Form 3853. California has also created a handy penalty estimation tool. First, you input your filing status of single, married, head of household, dependent child, or other legal designations. Next, the form asks for the number of dependent children and household income. From this basic information, you will get the total penalty amount. At this time, an individual will pay $750, and a married couple filing jointly will pay $1500.

The penalty also depends on the number of months you went without health insurance coverage. It is possible that you will owe less money if you were covered for part of the year.

How to Avoid Penalties – Valid Exemptions to Consider

The easiest way to avoid penalties under the 2020 California Health Insurance Mandate is to sign up as soon as possible for qualifying healthcare coverage. If your place of employment offers plans, speak with the appropriate administrative assistant or human resources person for assistance. If you are not sufficiently insured by your employer, look at the Healthcare.gov website or research private companies online that offer plans in CA.

Medicare and Medicaid also satisfied the mandate's requirements. If you are above the qualifying age, are designated disabled, or have an income below the threshold amount, you can apply through the appropriate governmental agency. Along with the new rules in California, the powers that be also approved a new subsidy program to help many state residents qualify for government medical coverage.

Exemptions exist that remove the risk of tax penalties if you do not get appropriate health insurance coverage in California. Although it is beneficial to have medical coverage for both wellness visits and acute or chronic medical problems, some individuals may have difficulty getting insurance. Find out if you qualify for one of these exemptions to avoid the financial hardship of a tax fine.

  • Income low enough that you do not have to file taxes
  • Minimum health insurance is more than 8.24% of your household income
  • Residents of another state or country who are not legally bound to California rules
  • Religious exemptions due to conscious objectivity or healthcare sharing
  • Native American or indigenous tribe recognition
  • Incarceration after receiving final charges and penalties

In short, the three main ways to avoid paying any tax penalties for the 2020 tax year and beyond include having appropriate health care coverage, being exempt due to religious or certain cultural beliefs, or experiencing situational or affordability hardships that cannot be overcome with subsidies or programs like Medicaid.

The goal of the Affordable Care Act and the associated California Health Insurance Mandate is to ensure that every resident of the state has protection and access to appropriate medical services as needed. The state does a lot of good when it comes to ensuring that low income individuals and families get the coverage they need. Collecting tax penalties or fines does not appropriately compensate for taking care of uninsured people. Also, appropriate healthcare gives peace of mind to individuals who want to avoid costly bills in the future.

Understanding the requirements is just the beginning. Full knowledge of the penalties associated with not having medical coverage can help encourage currently uninsured or underinsured individuals and families to seek out new solutions. There are many options to consider. Unless you and your family fall into one of the specific categories for exemption, protect your tax refund and your health by finding and signing up for full healthcare insurance as soon as possible. AT the time of this writing, there are a few other states and jurisdictions besides which impose a penalty tax for going without health insurance coverage. They are Rhode Island, Vermont, Washington D.C. (District of Columbia) and Massachusetts.

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The January 2020 California health insurance mandate made changes to the requirements for health coverage in the state. Some residents still have questions about how to find private health insurance that satisfies the rules. When you understand the mandate requirements and potential penalties for failing to get sufficient coverage, your quest may become easier.

To best avoid penalties associated with the California laws, learn all the requirements your health insurance plan must comply with before you sign up. While most providers have automatically adjusted plans to meet the minimal essential coverage, you may want to do your own research to get appropriate insurance without excessive cost.

What Does the California Health Insurance Mandate Require?

The first thing to understand about these new laws that cover health insurance in CA is that every single person in the state must have coverage. This includes adults of all ages, students, teenagers, and children. There are no specific rules about where you get the insurance as long as it provides coverage of all types outlined in the new rules. This includes employer-sponsored plans, direct private coverage, and government facilitated programs like Medicare and Medicaid.

The California health insurance mandate follows the same rules for insurance coverage as the Affordable Care Act put in place on a federal level. This includes 10 coverage types:

The first and most important way to avoid penalties associated with the CA insurance mandate is to only choose a program and sign up for a plan that handles all of these things.

What Is the California Penalty for No Health Insurance?

Instead of direct fines payable to the state, failure to get appropriate health insurance in California will result in what is called an Individual Shared Responsibility Penalty. This involves a certain amount of money paid when you file your state tax returns. Adults need to pay a certain percentage based on their income and filing status. The parents or guardians of a minor child who does not have appropriate health coverage is 50% of the adult rate. The total amount you end up paying with your state taxes includes the total fine per person. Therefore, a family of two adults and two children, for example, will end up paying a large lump sum all at once.

The specific penalty for an individual or family depends on the rulings in Form 3853. California has also created a handy penalty estimation tool. First, you input your filing status of single, married, head of household, dependent child, or other legal designations. Next, the form asks for the number of dependent children and household income. From this basic information, you will get the total penalty amount. At this time, an individual will pay $750, and a married couple filing jointly will pay $1500.

The penalty also depends on the number of months you went without health insurance coverage. It is possible that you will owe less money if you were covered for part of the year.

How to Avoid Penalties – Valid Exemptions to Consider

The easiest way to avoid penalties under the 2020 California Health Insurance Mandate is to sign up as soon as possible for qualifying healthcare coverage. If your place of employment offers plans, speak with the appropriate administrative assistant or human resources person for assistance. If you are not sufficiently insured by your employer, look at the Healthcare.gov website or research private companies online that offer plans in CA.

Medicare and Medicaid also satisfied the mandate's requirements. If you are above the qualifying age, are designated disabled, or have an income below the threshold amount, you can apply through the appropriate governmental agency. Along with the new rules in California, the powers that be also approved a new subsidy program to help many state residents qualify for government medical coverage.

Exemptions exist that remove the risk of tax penalties if you do not get appropriate health insurance coverage in California. Although it is beneficial to have medical coverage for both wellness visits and acute or chronic medical problems, some individuals may have difficulty getting insurance. Find out if you qualify for one of these exemptions to avoid the financial hardship of a tax fine.

In short, the three main ways to avoid paying any tax penalties for the 2020 tax year and beyond include having appropriate health care coverage, being exempt due to religious or certain cultural beliefs, or experiencing situational or affordability hardships that cannot be overcome with subsidies or programs like Medicaid.

The goal of the Affordable Care Act and the associated California Health Insurance Mandate is to ensure that every resident of the state has protection and access to appropriate medical services as needed. The state does a lot of good when it comes to ensuring that low income individuals and families get the coverage they need. Collecting tax penalties or fines does not appropriately compensate for taking care of uninsured people. Also, appropriate healthcare gives peace of mind to individuals who want to avoid costly bills in the future.

Understanding the requirements is just the beginning. Full knowledge of the penalties associated with not having medical coverage can help encourage currently uninsured or underinsured individuals and families to seek out new solutions. There are many options to consider. Unless you and your family fall into one of the specific categories for exemption, protect your tax refund and your health by finding and signing up for full healthcare insurance as soon as possible. AT the time of this writing, there are a few other states and jurisdictions besides which impose a penalty tax for going without health insurance coverage. They are Rhode Island, Vermont, Washington D.C. (District of Columbia) and Massachusetts.

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