California has an individual mandate penalty. If you don’t have health insurance for several months, you will have to pay penalty when you file your California income tax return. The flat rate penalty of $900 per adult, or $450 for a child is not too bad. However, if you fall into the penalty bracket of 2.5 percent of your household income, that amount can sting.
From the California Franchise Tax Board website:
Beginning January 1, 2020, all California residents must either:
- Have qualifying health insurance coverage
- Obtain an exemption from the requirement to have coverage
- Pay a penalty when they file their state tax return
To avoid a penalty, you will need qualifying health coverage for each month beginning on January 1, 2020 for:
- Yourself
- Your spouse or domestic partner
- Your dependents
Many people already have qualifying health insurance coverage through:
- Employer-sponsored plans
- Coverage purchased through Covered California or directly from insurers
- Medicare
- Most Medi-Cal
For information about other exemptions that may apply, see the exemption list.
Use this tool to estimate the penalty you may owe. Use Form 3853 to get an accurate penalty amount.
Calculating California Individual Mandate Penalty
The penalty is the higher of the flat rate amount or the income percentage. With the income, California takes your income and subtracts the filing threshold dollar amount. They then multiply the remainder by 2.5 percent. If the percentage amount is greater than the flat amount, that is the amount that is added to the income tax return as a penalty.
Family Penalty Estimator
The penalty estimator is fairly straight forward to use. In this example, the dates of birth are entered for the adults, 2 dependents are noted, and the estimated income amount is entered.
This family of four, if they have no health insurance for the full year (2025) will be levied a penalty of $2,700.
Partial Year Coverage Penalty
Within the penalty estimator, you can indicate which months you did not have creditable health insurance coverage. In this scenario the family only had health insurance for half of the year.
The penalty for only having health insurance for six months is $1,350.
There are several conditions that preempt any penalty such as an income below the filing threshold. For some exemptions, you must contact Covered California. They will examine your situation and if you meet the conditions, issue you an Exemption Control Number. The ECN allows you to enroll in a Minimum Coverage plan if you are over 30 years of age.
YouTube video of the California Health Insurance Penalty
