As expected, California joins three other states (Massachusetts, New Jersey and Vermont) and Washington, D.C., in passing its own individual mandate. This is in response to the federal government repealing the individual mandate (as part of the Affordable Care Act) effective January 1, 2019.
The mandate will tax all CA residents, including dependents, who do not buy health insurance. Approximately 93 percent of Californians have health insurance, and data points to the young and healthy being the most likely to pay the tax.
In this scenario, the CA individual mandate would serve to ensure stabilization in the State’s individual market as Governor Gavin Newsom hopes this new law will force the young and healthy to purchase individual health insurance.
What is it? A tax on CA residents who do not purchase health insurance.
How much is it? $695 per adult, $347.50 per child, or 2.5 percent of a household’s gross income, (whichever amount is greater).
When does it go into effect? January 1, 2020.
Are there any exemptions? Yes.
(1) An individual who has in effect a certificate of exemption for hardship or religious conscience issued by the Exchange under Section 100715 for that month.
(2) An individual who is a member of a health care sharing ministry for that month. “Health care sharing ministry” has the same meaning as the term was defined in Section 5000A(d)(2)(B) of the Internal Revenue Code on January 1, 2017.
(3) An individual who is incarcerated for that month, other than incarceration pending the disposition of charges.
(4) An individual who is not a citizen or national of the United States and is not lawfully present in the United States for that month.
(5) An individual who is a member of an Indian tribe, as defined in Section 45A(c)(6) of the Internal Revenue Code of 1986, during that month.
(6) An individual who is a bona fide resident of another state for that month.
You can view the entire text of the bill here.
If you have any questions regarding this topic, please feel free to contact me.