California joins DC and New Jersey in requiring residents, starting this year, to maintain individual health coverage. California residents who do not have health coverage or do not qualify for an exemption will be subject to state tax penalties.
With the California individual mandate, employers who employ California residents will have to comply with health coverage reporting requirements. Starting in 2021, employers with self-funded health plans will annually report to the state information about employees covered by the plan in the prior year. The reporting requirement will follow the ACA reporting as California will accept Form 1095-B/C and Form 1094-B/C transmissions. Reporting must be filed by March 31, 2021.
The individual tax penalty for not maintaining minimum essential coverage is the greater of 2.5% of the taxpayer’s household income above the state income tax filing threshold or $695 per adult and $347.50 per child (to a maximum of $2,085). There are a few exemption reasons that may be requested to avoid the coverage requirement.
BAS is offering a state ACA filing services for our federal ACA clients. For more information, contact your account manager or solutions@BASusa.com.