California Establishes Individual Healthcare Mandate Penalty Beginning January 1, 2020

While the federal penalty for failure by individuals to access health insurance under the Patient Protection and Affordable Care Act (also known as Obamacare) was eliminated by the Tax Cuts and Jobs Act of 2017, several states, including California, have instituted similar penalties. In California, Assembly Bill 414 (AB 414) (Bonta, Chaptered October 12, 2019) which takes effect on January 1, 2020, requires Californians to have qualifying health insurance coverage throughout the year.

Under the new mandate, individuals who fail to maintain qualifying health insurance coverage face the penalty of $695 when they file their 2020 state income tax return in 2021. The penalty for dependent children is half of the amount imposed on individual adults. Married couples will pay $1,390. A family of four, for example will be subject to a $2,085 penalty.

Other jurisdictions with existing health insurance mandates and penalties are Massachusetts, New Jersey, and the District of Columbia. Rhode Island will join California with its own penalty system in 2020. Vermont will institute its own individual mandate in 2020, and it is expected the mandate will carry with it similar penalties.

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