Now that the federal Individual Mandate requirement for health insurance has loosened – since setting the penalty at 0 dollars, the law is effectively nullified – individual states are now passing their own mandate laws. With passage of the Minimum Essential Coverage Individual Mandate, California is poised to join those ranks.
Effective January 1, 2020, the mandate requires all Californian residents (along with spouses and dependents) to enroll in a qualified insurance plan for each month of the year. Those who fail to maintain health insurance coverage will be subject to a Shared Responsibility Penalty , to be determined and collected by the Franchise Tax Board. Some exceptions to the law do apply, according to financial hardship and religious belief as dictated by Covered California.
Currently, 93 percent of the state’s population is covered by a health insurance plan. New affordability provisions within the law aim to close that gap, so that the state can achieve 100 percent coverage.
Currently, individuals and families with incomes between 100 and 400 percent of the federal poverty level can obtain government subsidies to make health insurance premiums more affordable. The new law will expand that bracket up to 600 percent, so that more Californians can obtain coverage.
The new legislation also raised Medi-Cal’s age cut-off for undocumented residents, from 18 to 26.
In the wake of the new law, we can expect to see a ripple effect upon other policies regarding health insurance. For example, the legislation also calls for additional reporting requirements under Internal Revenue Code 6055. “Applicable entities”,such as health insurance companies and companies which provide health insurance coverage, will be required to provide proof of coverage to the Franchise Tax Board each year. Penalties will be imposed upon companies that fail to complete their filings.
We will keep you updated on these changes as they occur. In the meantime, please don’t hesitate to contact us if you have questions about the new health insurance mandate law. We can assist both individuals and employers to ensure that you’re in compliance with the law.