Make Sure You Have Health Coverage
The mandate, which takes effect on January 1, 2020, requires Californians to have qualifying health insurance coverage throughout the year.
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.
Under the new mandate, those who fail to maintain qualifying health insurance coverage could face a financial penalty unless they qualify for an exemption.
Generally speaking, a taxpayer who fails to secure coverage will be subject to a penalty of $695 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.
The penalty is based on your state income and the number of people in your household.
Summary of possible penalties
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.
The open enrollment period to sign up for health care coverage through Covered California is scheduled for October 15, 2019 through January 31, 2020.
Apply For An Insurance Exemption
There are some circumstances in which a person may be found exempt from having to pay a tax penalty. Some of these allowable exceptions include:
- If coverage is proven to be unaffordable.
- If a person has a short coverage gap, meaning that they are uninsured for less than three consecutive months during the year.
- If a persons income is lower than the state threshold for filing taxes, which usually means that they are not required to file taxes or pay penalties for not having health insurance coverage.
- If a person was incarcerated.
- If a person is a member of an Indian tribe.
- If a person experienced a general hardship, such as eviction, foreclosure, homelessness, unpaid medical bills, death of a close family member, or domestic violence.
- If a person is a member of a certain religious sect.
Is There A Penalty For Not Having Health Insurance In 2019 2020 Or 2021
As of Jan. 1, 2019, there is no penalty for not having health insurance. You wont need to qualify for an exemption to not pay a penalty when you pay your federal taxes.
However, some states still require you to be enrolled in health insurance coverage. California, the District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont have their own individual mandates. If you decide not to enroll in coverage in one of these states, you may owe a penalty fee when you file your taxes for the 2019 plan year.
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Health Insurance Penalty Exemptions
The main exemption from the state-level individual mandate is the affordability exemption. If the least expensive plan premium is greater than around 8% of your household income in 2021, there is no tax penalty for being uninsured.
There are several other exemptions which include:
- Low income
- Religious conscience exemption
- Hardship exemption: homelessness, eviction, natural disaster, domestic violence, bankruptcy, or other disrupting life events
- Short coverage gap
- Part of a federally recognized Native American tribe
You can file for a hardship exemption here. To find out more about state-specific exemptions, you can visit the state website:
What Are My Options For Complying With Obamacare
You have 3 options and two of them involve a penalty:
- Get no insurance and pay a penalty for no health insurance at tax time.
- Get cheap insurance and pay a penalty at tax time.
- Enroll in a qualified health plan. This option does not have to be through Covered California to avoid the penalty, but it does have to be a Covered California plan in order to qualify for a government subsidy.
- Enroll in a Health Care Sharing Plan, which is exempt from the penalty and my offer lower premiums than traditional health insurance.
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How To Apply For An Exemption For 2018 And Earlier
Depending on the type of exemption you qualify for, you will need to submit an application to Healthcare.gov or request the exemption from the Internal Revenue Service when you file your taxes. .
- Federal Health Insurance Marketplace : Go to HealthCare.gov to determine which exemption to request. Print out, complete and mail the federal Application for Exemption. The completed form and any supporting documents should be mailed to:Health Insurance Marketplace – Exemption Processing465 Industrial Blvd.London, KY 40741
- IRS: Information for claiming an exemption through the IRS when you file your taxes can be found at www.irs.gov.
MNsure uses the federal Health Insurance Marketplace to process exemption applications. The federal government will notify you if you qualify for an exemption. If you apply to HealthCare.gov and qualify, you will receive an exemption certificate number that you’ll need for your federal income tax return you file for the year of the exemption. For questions about the status of your application or your eligibility for an exemption, visit HealthCare.gov, or call the Health Insurance Marketplace Help Center at 800-318-2596. TTY users should call 855-889-4325. If you have questions about how to get a copy of and where to submit the application form, call the MNsure Contact Center at 855-366-7873 or 651-539-2099.
Be Careful When Changing Car Insurance Companies
It can be wise to switch car insurance companies if you find a better rate, but make sure you go about things the right way.
One possible mistake when changing companies is not taking into account an insurance gap. Make sure your new policy is scheduled to take effect as soon as your old policy ends.
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Tips To Avoid Getting Fined For Driving A Vehicle Without Insurance
Make sure you follow these tips to avoid paying heavy fines:
- Store a hard copy of all essential documents such as your license, RC, and pollution certificate in your vehicle.
- Store a soft copy of all these documents on your mobile as well.
- Make sure you do not miss the renewal of your insurance policy to avoid penalties.
- Buy the insurance policy for every vehicle before you get on the road. A third-party liability policy is mandatory because the quantum of liability involved in road accidents injuring others attract a huge payment.
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How Do I Enroll In A Health Insurance Plan During Open Enrollment
You can enroll in a health insurance plan online, over the phone, or in person. To enroll, you will need the following information:
- Name, address, email address, social security number, birthday, and proof of citizenship status
- Household size and income if you want to apply for subsidies
- Coverage details and premium for an employer-sponsored plan thatÃ¢â¬â¢s available to anyone in your household
- Payment information for your premiums
- Your doctorsÃ¢â¬â¢ names and zip codes so that you can check to make sure theyÃ¢â¬â¢re in-network
- A list of medications taken by anyone who will be covered under the policy
- If you want to enroll in a catastrophic plan and are 30 or older, youÃ¢â¬â¢ll need a hardship exemption.
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What Is The Individual Mandate
The health insurance marketplacesestablished by the AffordableCare Act provide coverage to 11.41 million consumers, according to anApril 2020 report from the Centers for Medicare & Medicaid Services .
Prior to 2020, if you went without Affordable Care Act compliant health insurance for more than two consecutive months, you would pay a penalty. This requirement was commonly known as the Obamacare individual mandate. The purpose of the penalty was to encourage everyone to purchase health insurance if they werent covered through their employment or a government-sponsored program. According to Kaiser Health News, the federal ACA penalty for going without health insurance in 2018 was $695 per uninsured adult or 2.5% of your income, whichever amount was higher.
In response to concerns about the affordability of marketplace ACA plans, congress passed the Tax Cuts and Jobs Act at the end of 2017. The law reduced the individual penalty of the Obamacare individual mandate to zero dollars, starting in 2019. Now that the individual mandate tax penalty has been removed, there is not a tax penalty at the federal level.
What Is The Fine For Driving Without Insurance Policy
As per the new Motor Vehicle Act 2019, the fine for the first offence of driving without insurance policy is Rs.2,000/- and/or imprisonment of up to 3 months. Earlier, this fine applicable was Rs.1,000/- and/or imprisonment of up to 3 months.
For the second time offence, if you continue to drive a vehicle without insurance policy then you will be liable to pay a fine of Rs.4,000 and/or imprisonment of up to 3 months.
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If I Dont Qualify For An Exemption How Do I Avoid The Penalty For No Health Insurance 2020
The best way to avoid the health insurance penalty is to obtain coverage as soon as possible during the open enrollment period, which began on October 15, 2019 and will continue through January 15, 2020.
If you already have a plan, the open enrollment period is still a good time to review your current policy and compare coverage options in case you discover an option that better suits your needs.
Calculating Your Penalty Fees
For 2018 and earlier, you can calculate the the amount youll pay in penalty fees two different ways.
Youll pay whichever is higher. Using the percentage method, only the part of your household income thats above the yearly tax filing requirement is counted. Using the per person method, you pay only for people in your household who dont have insurance coverage.
If you have coverage for part of the year, the fee is 1/12 of the annual amount for each month you dont have coverage. If you do not have coverage for only 1 or 2 months, you dont have to pay the fee at all.
You can use the IRS penalty fee estimator to figure out how much you might owe from uncovered periods in 2018 and earlier.
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How Can I Avoid The Individual Mandate Tax
Its easy to find affordable health insurance and the penalty for not having any is often not that much less than having the peace of mind that you have a cap on your medical bills. If you are suddenly injured or if you fall ill, the cost of not having any coverage can be devastating. Medical bankruptcy is a serious problem that plagues many Americans.
Its a good idea to compare health insurance quotes if youre interested in purchasing a plan to avoid fines next tax season. We can help. If you missed Open Enrollment, you may have a qualifying event that makes you eligible to apply past the deadline.
About the Author
Fran Majidi manages content on SmartFinancial’s website. She’s had nearly a decade’s worth of experience writing about insurance-related topics. Prior, she was an arts and entertainment editor in New York City. She has a B.A. from Barnard College and an M.F.A. in writing from The New School. She writes books under her given name, Afarin Majidi.
Premium Subsidies And Buying Coverage
If you dont have health insurance through your job or a government program, you may buy a plan from an insurance company or agent. You can also buy coverage through the federal health insurance marketplace at HealthCare.gov or by calling 1-800-318-2596. For lists of companies and health maintenance organizations selling individual plans in Texas, visit TDI’s Lists of Companies and HMOs.
- Open enrollment. You usually must buy health insurance during the annual open enrollment period. The open enrollment period is from November 1 to January 31 each year. You may qualify to buy health insurance at other times of the year if you lose existing coverage, or have life changes like getting married, getting a divorce, or having a baby.
- Preexisting conditions. Health insurance companies must sell a plan to anyone who applies during the open enrollment period. Companies may not deny you coverage or charge you more because of a preexisting condition or disability.
- When deciding your premium, insurance companies may consider only your age, where you live, whether you smoke or use tobacco, and whether the coverage you’re buying is for an individual or a family. They may not consider your health status, medical condition or history, claims experience, genetic information, gender, disability, or other health factors.
For more information about subsidies, visit the HealthCare.gov subsidies page.
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Californians Without Health Insurance Will Pay A Penalty Or Not December 12 2019
What you need to know about Californias Individual Healthcare Mandate, including potential financial penalties, available exemptions and possible financial assistance.
The HEAL Team
Californians, be warned: A new state law could make you liable for a hefty tax penalty if you do not have health insurance next year and beyond.
But some of you need not worry: The law contains several exemptions that will allow certain people to avoid the penalty, among them prisoners, low-income residents and those living abroad.
It will be really important that people get clear guidance and instruction to make sure they dont inadvertently pay a penalty when they are eligible for an exemption, says Laurel Lucia, director of the Health Care Program at the University of California-Berkeleys Center for Labor Research and Education.
The Golden State will join Massachusetts, New Jersey, Rhode Island, Vermont and Washington, D.C., in requiring their residents to have health coverage and dinging those without it.
Most types of insurance, including Medi-Cal, Medicare and employer-sponsored coverage, will satisfy Californias coverage requirement. People who purchase insurance for themselves and their families, either through Covered California, the states health insurance exchange, or the open market, will have until Jan. 31 to buy a health plan for 2020.
How you claim an exemption depends on the type you are seeking.
Is There A Penalty For Not Having Minimum Essential Coverage
There is no longer any federal penalty for not having a healthcare plan that meets the standards for minimum essential coverage. The provision still technically exists in the ACA, but the IRS tax penalty was eliminated for the 2018 tax year and beyond due to the Tax Cuts and Jobs Act of 2017.
Despite there being no federal enforcement of the individual mandate, certain states have taken it upon themselves to implement individual mandates of their own for a variety of reasons. If you reside in one of the states listed below, you may still face a penalty if you dont have a plan that meets your states criteria for minimum essential coverage.
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Health Insurance Penalty Options
Due to the fact that penalties were lower at first, some California residents may opted to simply pay the penalty and go without health insurance coverage, especially in the first couple of years. Another option some chose is to get cheap coverage and still pay the penalty. For example, if in tax year 2015 you were single, aged under 65, had a taxable income of $50,000, and you were uninsured the whole year, your penalty would be calculated as follows:
The greater of $395 or $50,000 income minus $10,150 Federal Minimum Threshold = $39,850 x 2% = $797 penalty. In this scenario, your tax penalty would be $797. If you remained uninsured in 2017, your penalty would go up to approximately $996 depending on the Cost of Living Adjustment and the Federal Minimum Threshold at that time. At $996 per year, that is still only about $83 per month. If you compare that penalty with paying a theoretical $375 a month for a Covered California plan, it may make sense to just pay the penalty for no health insurance.
* If you enrolled on your current plan before March 23, 2010 and have not changed coverage, then you may have grandfathered status. However, not all carriers in California are giving the option to maintain grandfathered status. Check with your insurance carrier to verify if your plan is on grandfathered status.
What To Look For In A Healthcare Plan
The risks you run while being uninsured simply arent worth it. Health coverage isnt just a luxuryits an essential service that can protect both your physical and financial health.
Wondering where to start when it comes to shopping for plans?
First, you should narrow down the type of health plan that best fits your needs. Questions you should ask yourself include:
- Are you healthy and fit? Do you regularly exercise and eat well? Do you have chronic health issues? Do you engage in risky activities? The type of insurance coverage you require will depend upon your age, health, and overall risk profile.
- How frequently do you go to the doctor? Are you a regular at the doctors office, or do you prefer to go once a year? If youre regularly meeting with physicians, undergoing scans or tests, or need prescription medications, you may prefer a plan with lower copays and deductibles.
- Whats your financial situation? If youre worried about finances, you may want a health plan with lower monthly premiums, which is meant mainly for infrequent or emergency visits.
- What are your current options? Can you access high-quality health insurance through your current employer? How about your parents? If youre under 26, you can join their plan. The ACA is another option and provides subsidies for low-income individuals.
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