Did you enroll in a healthcare plan for the 2020 tax year? If not, you could be subject to the state’s Individual Shared Responsibility Penalty when you file your taxes this spring.

California’s Individual Mandate went into effect on January 1, 2020. This law mirrors the federal individual mandate for health insurance, meaning most people must be enrolled in a health insurance plan. Those who failed to comply with the mandate are subject to a penalty on their tax returns.

On the federal level, the penalty has now been set at zero dollars, essentially nullifying the law for now. However, California can and will impose a penalty on the state level, so everyone needs to be aware of this law.

Those who did not maintain health insurance coverage for the entire year (2020) will be charged a penalty of $750 per adult and $375 per child, or 2.5 percent of gross household income that exceeds California’s filing threshold, whichever is higher. You can use the state’s Individual Shared Responsibility Penalty calculator to see how much you could be charged.

Some individuals will be exempt from the penalty, such as

  • Those whose incomes fall below the filing threshold
  • Those who are members of a healthcare sharing ministry
  • Those who are incarcerated
  • And those subject to certain other situations

You can find a list of situations which qualify for an exemption here.

If you wish to investigate your health insurance options for the future, give us a call to discuss your situation. In many cases subsidies are available to help with the cost of premiums.