Beginning in 2019, the federal Individual Mandate that requires most Americans to enroll in a health insurance plan will be effectively voided. Stumped by their inability to simply overturn the law, lawmakers who authored the Tax Cuts and Jobs Act set the penalty at zero dollars instead. However, many state legislatures have responded by drafting their own individual mandate laws. With the passage of the Minimum Essential Coverage Individual Mandate, California will now impose a requirement for most state residents to enroll in a qualified health insurance plan.
Right now, about 93 percent of our state’s residents are covered by a health insurance plan. The Individual Mandate law aims to improve upon that number, and achieve nearly 100 percent enrollment. Some exceptions to the law do exist, such as those for financial hardship and religious belief (as defined by Covered California). The law does expand upon current subsidy provisions, to help more Californians afford their coverage.
Currently, those stipends are available to individuals whose income falls between 100 and 400 percent of the federal poverty level. The new law raises the income limit to 600 percent of the poverty level, offering even more assistance to state residents.
The law also allows for more undocumented residents to enroll in Medi-Cal, by raising the age limit for eligibility from 18 to 26.
Beginning on January 1, 2020, all Californians (and their spouses and children) will be required to maintain enrollment in a qualified health insurance plan for each month of the year. Failure to comply with the law will result in a Shared Responsibility Penalty, imposed by the Franchise Tax Board. The exact amount of this penalty is yet to be determined.
,We expect to see a ripple effect upon other health insurance requirements. Already, the reporting requirements under Internal Revenue Code 6055 have been expanded, so that insurance companies and businesses which provide group health insurance plans must provide proof of coverage to the Franchise Tax Board each year. Those that do not fulfill this requirement will be subject to a penalty.
As the effects of the new law continue to ripple outward, we will keep you updated on new policies and procedures that might affect you. In the meantime, please contact us if you have any questions. Enrollment will open later this year, and at that time we can walk you through the requirements to help ensure that you are in compliance with the law.