• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
New City Logo

New City Insurance

Employee Benefits & HR Consulting Firm

  • Benefits Consulting
    • 401k & Retirement
    • Employee Benefits Benchmarking
    • Executive Benefits
    • Group Health Insurance
  • HR Compliance & Technology
    • Benefits Administration Technology
    • Employee Benefits Compliance
    • HR & Payroll Integration
    • HR Support
  • Our Process
  • Industries
    • Aerospace Industry
    • Biotech Industry
    • Engineering Industry
    • IT Industry
    • Manufacturing Industry
    • Gas & Oil Industry
  • Request Consultation
  • Industries
    • Aerospace Industry
    • Biotech Industry
    • Engineering Industry
    • IT Industry
    • Manufacturing Industry
    • Gas & Oil Industry
  • About
  • Blog
  • Contact
  • Client Portal
  • 888.210.2759
  • Request Consultation

Tax Penalty For Not Having Health Insurance In CA

December 27, 2021, by New City Insurance

california beach with penalty for not having health insuranceHaving health insurance is not just a recommendation in some states. In California, it is now a law that requires all California residents to maintain a qualifying health insurance policy year-round. Adjusting to this law is a tremendous task for any company with employees in California. Human Resource Managers must consider how residents who fail to maintain qualifying health insurance may now face penalties and how this weighs for them when seeking employment.

Californians who did not previously qualify for federal health insurance may now qualify for a new state subsidy program which is expected to help more than 235,000 people. The mandate does add urgency for Human Resource Managers to effectively guide their employees through the health plan options and potential tax penalties if they choose to remain without coverage. Human Resource Managers can learn more about this new health insurance mandate as we explain why some employees in California may face a hefty tax penalty at tax time.

A Brief History Of Healthcare Reform

In 2010, the Patient Protection and Affordable Care Act (ACA) or “Obamacare” was passed with the goal of making healthcare more accessible to people nationwide. The ACA prevented people from being denied or charged more for health insurance due to having preexisting medical conditions.
The federal mandate also required health insurance companies to meet specific requirements to ensure that people of any age or health status could receive coverage. Employees who chose to remain uninsured faced a financial penalty during the tax season.

doctor in california talking about penalty for not having health insuranceIn 2019, the financial penalty was removed with the Tax Cuts and Jobs Act. People could opt out of health insurance without fear of encountering a penalty; and with no federal mandate in place, health insurance costs started to skyrocket.

The individual mandate in California was announced in 2019 when Governor Gavin Newsom and other advocates revealed their plans for the Act. Similar to Obamacare, the Act aimed to give more people the healthcare coverage they needed while lowering the overall cost of healthcare for everyone in the state.
The individual mandate was voted upon by state legislators in June 2019 and Governor Newsom signed it into law in July of the same year.

Health Insurance Tax Penalties In CA

January 2021 marked the first time since the end of the Obamacare penalty that employees will be penalized in California for not having health insurance. Employees who receive a W-2 will discover a penalty on their form if they did not have insurance in 2020.

There may be some exceptions to this rule in California, including households where the income level falls below the threshold for state tax filing. The California Individual Shared Responsibility Penalty is either 2.5% of gross household income exceeding California’s filing threshold or a flat penalty per family member ($800 per adult and $400 per child in 2021).
You can estimate your potential penalty here.

Ways To Avoid An Insurance Penalty

Employees have two main options when it comes to health insurance in California to avoid penalties. These include:

1. Enroll In A Qualified Health Plan

Human Resource Managers can help employees by enrolling in a qualified health insurance plan as the best way to avoid penalties at tax time. Employees have the option to sign up for a policy if they have a qualifying life event. Penalties will be reduced for each month that a person has insurance as they are calculated on a month-to-month basis. The more months that a person goes without health insurance, the higher the penalty.

Employees who have health insurance should start preparing now for the 2021 tax season by gathering their health insurance coverage documents, such as Forms 1095-A, 1095-B, or 1095-C, which should arrive in the mail. Employees who receive healthcare coverage from their employer should receive a statement that indicates that they were covered for part of the year or the whole year.

2. Apply For An Insurance Exemption

golden gate bridge demonstrating penalty for not having health insuranceThere are some circumstances in which an employee may be found exempt from having to pay a tax penalty. Some of these allowable exceptions include:

  • If coverage is proven to be unaffordable.
  • If a person has a short coverage gap, meaning that they are uninsured for less than three consecutive months during the year.
  • If a person’s income is lower than the state threshold for filing taxes, which usually means that they are not required to file taxes or pay penalties for not having health insurance coverage.
  • If a person was incarcerated.
  • If a person is a member of an Indian tribe.
  • If a person experienced a general hardship, such as eviction, foreclosure, homelessness, unpaid medical bills, death of a close family member, or domestic violence.
  • If a person is a member of a certain religious sect.

Contact The Experts At New City Insurance

Tax penalties can come as a surprise for people who are not familiar with the 2020 changes to California health insurance coverage. To learn more about the tax penalty for not having health insurance in California and how your organization can automate communications about the CA health insurance mandate, contact New City Insurance.

Have Additional Questions?
Call Today: 888.210.2759
Request a Consultation

Filed Under: Group Health Insurance,  Insurance

Primary Sidebar

Have A Question?

Ask a question or request a consultation, and we will respond to you in a timely manner.

  • This field is for validation purposes and should be left unchanged.

Footer

New City Logo
Corporate Headquarters 600 B St STE 300, San Diego, CA 92101
888.210.2759
info@newcityinsurance.com

Link to company Facebook page

Link to company Twitter page

Link to company LinkedIn page

Insurance Products

  • Commercial Insurance
  • Pay-As-You-Go Workers Comp
  • Group Health Insurance
  • Workers Comp
  • Self Funding
  • Minimum Essential Coverage

Benefits Consulting

  • 401k & Retirement
  • Employee Benefits Benchmarking
  • Executive Benefits
  • Group Health Insurance
  • PEOs
  • Wellness Plans

HR & Technology

  • Benefits Technology
  • Benefits Compliance
  • Growth Strategy
  • HR & Payroll Integration
  • HR Support

Industries

  • Aerospace
  • Biotech
  • Engineering
  • IT
  • Manufacturing
  • Gas & Oil
Google Rating
5.0
New City Insurance
New City Insurance
5.0
Carol Zhang
Carol Zhang
04:29 06 Mar 22
As a rapidly expanding national media organization, the employee benefits strategy and administration that New City has provided us during our growth has been invaluable. They have been proactive about informing us of the different benefit strategies available to us as we grow as well as managing the additional compliance laws and reporting requirements at each stage of our growth.
Claudia Villalobos
Claudia Villalobos
20:14 03 Mar 22
New City Insurance made navigating through all the health insurances super EASY. Their documents are highly informative, professional, and easy to work with. Thank you for making the process of choosing a health plan so simple. You guys are THE BEST!
Philippe Salas
Philippe Salas
17:02 22 Feb 22
I never expected to have a good time talking to an insurance salesman, but let me tell you Brendan was quite the treat. He was very helpful explaining the options and has a wonderful sense of humor. I hope to speak with him every time I call.
Jennifer Polito
Jennifer Polito
17:15 09 Feb 22
Super easy enrollment process. Fast and friendly customer service. If you are looking for an insurance company that is there for you every step of the way I highly recommend New City Insurance.
Rocky Salas
Rocky Salas
23:46 07 Jan 22
So friendly, I hope to speak to him again in all my future insurance needs.
Rocky Salas
Rocky Salas
23:38 07 Jan 22
So friendly and soft spoken. I hope to speak to him again in all my future insurance needs.
Jose Brena
Jose Brena
13:20 06 Jan 22
Eric Calciano has been extremely helpful in finding and selecting the right insurance coverage for our company. With many options out there Eric assisted us on getting a low cost provider saving more than 20% than from our competitors and providing excellent coverage for our employees.
Anastasia Beaverhousen
Anastasia Beaverhousen
17:05 28 Dec 21
Signing up for insurance was quick and easy. Felicity Sundsboe
SFCC
SFCC
22:08 29 Nov 21
Jeff Stoltey and his team provide excellent customer service. Jeff has always provided my company SFCC with straightforward options. I went to a larger insurance company only to RUN BACK to Jeff at New City Insurance. I recommend them to anyone needing insurance without hesitation.
Kevin Luby
Kevin Luby
19:13 22 Oct 21
Quick, easy & informative. We were able to secure quality insurance for our small business on a tight deadline. Thanks for the help New City.
Theresa Ruybol
Theresa Ruybol
19:30 01 Jul 21
Eric was so great with us. He was very patient and kind as we are a newer smaller organization who is growing rapidly. With that said, we had made our inquiry, he had great rapid response and mostly had to wait on me. Any request that we made and/or questions we had, he was great answering and helping us understand. Then when we were ready for all documents and to move forward, Brendan helped with getting that together and the two of them worked their magic on New City's end to notify me of what was needed, assist me in that process and confirming that all was complete and approved for the coverage. I just want to say thank you all again so much, as insurance has always been confusing to me, and you all made that process go a lot smoother.Thank you
Andrea Ordendorff
Andrea Ordendorff
21:06 07 May 21
I've been working with both Clayton and Brendan for well over a year. As the purchase of our dental practice was delayed well over 14 months they both patiently supported me and continued to make themselves available. When we were officially ready to sign up they made the whole process seamless and super easy. This team is highly knowledgeable, professional, supportive, and efficient! I can't thank them enough for everything they've done.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
Mike McClay
Mike McClay
19:36 03 May 19
My employer uses New City as their insurance broker, and I'm always amazed when I call in for assistance by how knowledgeable and attentive their staff is with my requests. Their online benefits platform makes selecting insurance plans pretty darn easy. I would highly recommend their services.
Next Reviews Write a review
powered by Google
Privacy Policy | Terms Of Use