New Health Insurance Mandate
We all just enjoyed one solitary year free from any sort of insurance-related mandate involved in our tax returns. Hardworking folks who could not afford health insurance were no longer being penalized. People didn’t lose their anticipated tax refunds.
However, now anyone residing in California must have health insurance during the 2020 tax year or face being penalized. The state of California has a new health insurance mandate for tax year 2020. Anyone without health insurance for at least nine months of the year will face penalties. So, here’s what’s going on.
8 Months of Insurance to Avoid Penalties
Beginning for the 2020 tax year California imposed a new health insurance mandate similar to what was part of the Patient Protection and Affordable Care Act from 2014 through 2018. Consumers who were not sufficiently covered for at least nine months out of the year will likely face a penalty in the spring of 2021 when they file their California state tax return.
A family of four would pay at least $2,000 or more for not having health insurance during 2020. That’s a big chunk of change! Covered California is working with the Franchise Tax Board to help alert Californians about the new law in an attempt to reduce the number of uninsured people in our state. California is serious about its citizens having health insurance.
What is Covered California?
It is the state’s health insurance marketplace where Californians can find affordable coverage from top insurance companies. Covered California is the only place where individuals who qualify can get financial assistance to reduce premium costs. Folks can choose the plan that works best for their needs and budget. Some consumers may even qualify for the low-cost or no-cost MediCal program.
Covered California is an independent part of the state government whose job it is to maintain the health insurance marketplace for California’s consumers. For additional information regarding Covered California visit their web site which is linked to this article. California has done their best to make enrolling in health insurance as simple as possible. How do you avoid getting penalized?
Enroll to Prevent Future Penalties
Consumers will need to sign up by Dec. 15 in order to have their coverage begin on Jan. 1. Covered California is the only place where residents can see both if they qualify for federal financial assistance or the new state subsidies all in one place. An estimated 1.1 million uninsured Californians are eligible for health insurance, either through Covered California or MediCal.
Visit Covered California or call Covered California at (800) 300-1506. Open enrollment runs through Jan. 31st every year. California is the first state in the nation to offer subsidies to eligible middle-income consumers were previously ineligible for Federal subsidies. Be sure to educate your clients before they get a surprise tax bill.
Inform Your Clients Before the Tax Bill Arrives
It’s always best to inform clients of bad news as quickly as possible. You want to stay ahead of the issue. Ideally, we all would have already warned our uninsured clients of the new realities for 2020. If not, there’s no time like the present!
If you are just learning about the California penalties now, then it’s time to minimize the damage. Inform your clients immediately about this new California law and the penalties involved. Ideally, get any uninsured clients to sign up for health insurance via Covered California.
And remember, there are always exclusions and abatement opportunities provided by the Franchise Tax Board. Learning to get the penalties abated or forgiven will be very, very useful. Are you prepared for the expanding tax resolution market? Have you kept up with your continuing professional education requirements? The nice folks at Pronto Tax School are here to help!
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