This article was posted on Tuesday, Oct 01, 2019

The California State Assembly passed a mandatory Individual Healthcare Insurance Responsibility Mandate under which a penalty may be imposed for each month that an individual fails to enroll in and maintain essential coverage.

On June 27th, California Governor Gavin Newson approved legislation under which beginning in 2020, California will impose an individual healthcare mandate. Residents must obtain healthcare coverage unless they qualify for an exemption.  Those who fail to obtain coverage may owe a penalty on their California income tax returns.

 Individual Shared Responsibility Penalty

Under S.B. 78, California will impose the penalty for each month that an individual fails to enroll in and maintain minimum essential coverage for: 

  • the individual
  • the individual’s spouse or
  • the individual’s dependents

The penalty for a tax year equals the lesser of:

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  • the total monthly penalty amounts for the year or 
  • 1/12 of the state average premium for California Health Benefit Exchange bronze plans, multiplied by the number of months in which the failure occurred.

 The monthly penalty equals 1/12 of the greater of:

  • $695 per adult plus $347.50 per child that failed to maintain required coverage during the month, up to a maximum of $2,085 or
  • 2.5 percent of the excess of the individual’s household income for the year over the amount of gross income that would trigger a state income tax return filing requirement.

 The specified dollar amounts are subject to cost of living adjustments. For tax years during which a similar federal penalty applies, California will reduce the state penalty.   It will reduce the penalty but not below zero by the amount of the federal penalty imposed for each month during which a state penalty applies.

 Exemptions From Imposition of Penalty

California will not impose a penalty on an individual for a month in which any of the following apply: 

  • The individual’s required contribution determined on an annual basis for coverage for the month exceeds 8.3 percent of the individual’s household income for the tax year; or
  • The individual does not have enough income to trigger a return filing requirement for the tax year.
  • If the last day of the month occurred during a period in which the household member did not maintain minimum essential coverage; but the period was a continuous period of three months or less.

Pete is with Muffoletto & Company.  For more information or questions relating to any tax or financial matters call (818) 346-2160 or visit on the web at