Californians who fail to sign up for health insurance this year may find an unpleasant surprise when filing their taxes in 2021.
California Senate Bill 78, which took effect Jan. 1, requires all California residents to sign up for health insurance or face a tax penalty. The penalty for each household will either be a flat amount based on the number of uninsured in the household or based on household income, whichever results in the higher amount.
If uninsured, households can expect to pay at least $695 per adult and $347.50 per child.
Households can qualify for exemptions if income is below the tax filing threshold or if health coverage exceeds 8.24% of household income in 2020, among other exemptions.
Those who experience a short coverage gap of less than three consecutive months will not be subject to the fine.
The California Franchise Tax Board will apply the penalty when households file their 2020 state tax returns in 2021.
The deadline for signing up for health insurance through Covered California is Jan. 31.
“We do not want Californians to write a check to the Franchise Tax Board when they could get coverage that is way more affordable than they think,” Covered California Executive Director Peter V. Lee said in a Jan. 23 press release. “This year there is new financial help that will help nearly 1 million people lower the cost of their coverage.”