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Tax Year 2020 State Health Insurance Mandates

Even though there is no longer a federal penalty for not having health insurance, four states and Washington DC do impose a penalty for residents not having health insurance for all or part of 2020.

As an additional reminder, California has instituted its own version of health insurance reform which includes a separate state subsidy that is similar to the Affordable Care Act.

Below are details of the penalty provisions for each of the affected States:

California
Beginning in calendar year 2020 all California residents must have health insurance. A lot of the rules are similar to the Affordable Care Act and California does have a penalty if an individual does not have health insurance.

The Penalty for not having health insurance is the higher of:

  • $750 per adult and $375 per dependent child under 18Or
  • 2.5% of their gross household income that exceeds the filing threshold for their filing status on their California individual income tax return

There are exemptions that are similar to what was available under the Affordable Care Act before the federal penalty went away. See California Form FTB 3853 instructions for a complete list of exemptions and how to apply for each one.

California taxpayers who obtain their insurance through Covered California will be receiving a California Insurance Marketplace Statement (Form FTB 3895) that is similar to the Federal Form 1095-A and will need to complete FTB Form 3849 to reconcile the subsidy with the calculated Premium Assistance Subsidy credit.

For more details on the penalty, exemptions, subsidies and the reconciliation see the Health Care Mandate page on the California Franchise Tax Board’s website.

Rhode Island
Beginning with calendar year 2020, all Rhode Island residents must have health insurance.

Rhode Island only added penalty and exemption provisions for health insurance.

The penalty is the higher of:

  • 2.5% of the household incomeOr
  • $695 per adult plus $347.50 per dependent child under 18

Rhode Island does have exemptions that were similar to what the IRS had before the federal penalty was calculated to zero.

For more details, see the Health Coverage Mandate page on the Rhode Island Division of Taxation website.

District of Columbia
Beginning with calendar year 2019, all Washington DC residents must have health insurance.

Washington DC only added penalty and exemption provisions for health insurance. The only subsidy is a federal subsidy.

The penalty is the higher of:

  • 2.5% of the household incomeOr
  • $695 per adult plus $347.50 per dependent child under 18

Washing DC does have exemptions that are similar to what the IRS had before the federal penalty was calculated to zero.

For more details see the Individual Responsibility page on the DC Health Link website.

New Jersey
Beginning with calendar year 2019, all New Jersey residents must have health insurance.

New Jersey only added penalty and exemption provisions for health insurance. The only subsidy is the federal subsidy.

The penalty is the higher of:

  • 2.5% of the household incomeOr
  • $695 per adult plus $347.50 per dependent child under 18

The penalty does not apply for taxpayers with $10,000 or less of income ($20,000 for MFJ).

New Jersey does have exemptions that are similar to what the IRS had before the federal penalty was calculated to zero.

For more details see the NJ Shared Responsibility page on the New Jersey Treasury website.

Massachusetts
Massachusetts has had a health insurance requirement since 2008.

The only subsidy involved is the federal subsidy.

The penalty is based on where the household income falls as a percentage of the federal poverty limit as follows:

  • 150% to 200%: $22 per month or $264 per year
  • 200.01% to 250%: $43 per month or $516 per year
  • 250.01% to 300%: $65 per month or $780 per year
  • Above 300%: $135 per month or $1,620 per year

There are exemptions for hardship that are listed on the Massachusetts website.

For more details see the Health Care Reform page on the Massachusetts website.

Vermont
Beginning with calendar year 2020, all Vermont residents must have health insurance.

There is not a penalty associated with this mandate.

For more details see the Vermont Health Insurance Marketplace page on the HealthInsurance.org website.

Mark Castro, CPA

Mark Castro, CPA

Mark has been with CrossLink Professional Tax Solutions (CPTS) since 2008, but has been in the tax industry since 1990. As the government/tax industry liaison for CPTS, Mark has been very active in working with the IRS, States, and other tax industry members to help improve communications, promote standardization, and simplification of eFile systems. Mark has also been active with industry associations as a board member of the National Association of Computerized Processors (NACTP) and the Council of Electronic Revenue Communication Advancement (CERCA) for many years. These two associations work with the IRS and States to help solve key eFile and electronic tax system issues and work to improve the operations of the State and IRS eFile systems.
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