As a part of its 2019 budget legislation, the California legislature has passed an individual mandate under Assembly Bill 414. The California legislation would require all individuals who are California residents to carry minimum essential Health Insurance coverage for themselves, their spouses and their dependents for every month beginning on and after January 1, 2020. The mandate would exclude individuals for hardship or religious conscience reasons.
The penalty for not having minimum essential coverage is like the penalty that existed under IRC Section 5000A before its amendment by the TCJA: 2.5% of the taxpayer’s household income over the state filing threshold or $695 per adult and $347 per child, whichever is greater. The dollar amounts would be increased annually by inflation. If less, the penalty would equal the state average premium for a “bronze” level health plan in the California Health Benefit Exchange, also known as Covered California.
California will soon join the growing list of jurisdictions that impose an individual mandate on their residents. Insurers and employers should be able to satisfy the new reporting requirement by leveraging the information on federal Forms 1095-B and 1095-C if there is no change in the reporting requirements at the federal level.