Since January 1, 2020, all California residents are required to have health insurance coverage. This article provides detailed information on the 2024 health insurance coverage requirements, types of exemptions, and methods to avoid penalties. Additionally, it includes real family examples to help you better understand the content.
Health Insurance Coverage Requirements
California residents must choose one of the following options:
- Have qualifying health insurance coverage
- Obtain an exemption from the requirement to have coverage
- Pay a penalty when filing their state tax return
Health insurance coverage for 2024 must be reported on your 2025 tax return. Typically, you should file your state income tax return by April 15, 2025, but the submission of California state income tax returns is automatically extended to October 15, 2025. (Note: Tax payments are not extended.)
How to Obtain Coverage
If you do not have coverage, open enrollment continues through January 31, 2025. You can sign up for health insurance through Covered California. Typically, you can enroll in coverage from November through January. For more information, visit Covered California or call 800-300-1506.
Types of Exemptions
Even if you do not have health insurance coverage, you may qualify for an exemption to avoid the penalty under certain circumstances. The following are examples of exemptions:
- Income below the tax filing threshold: For instance, if your annual income is below the minimum amount required to file a tax return.
- Health coverage is considered unaffordable: If the cost of health insurance exceeds 8.17% of your household income.
- Certain non-citizens: For example, some non-citizens who are not lawfully present in the U.S.
- Members of federally recognized Indian tribes: Individuals who belong to recognized Indian tribes.
- Religious conscience exemption: Exemptions based on certain religious beliefs.
- General hardships: Such as losing your home or being affected by a natural disaster.
- Short-term gap in coverage: If you were without coverage for less than three consecutive months.
For more details on exemptions, please visit Covered California.
Penalty
If you do not have health insurance coverage, or if you did not qualify for a coverage exemption for any month of the year, you will have to pay a penalty when you file your state tax return.
The penalty will be the higher of the following amounts:
- Flat amount: $900 per adult and $450 per child
- Percentage of household income: 2.5% of the amount of household income that exceeds the tax filing threshold
To estimate your penalty amount, you can use the Penalty Estimator tool.
What is the Tax Filing Threshold?
The tax filing threshold is the minimum income amount that requires you to file a tax return. This threshold determines whether an individual or family must file taxes. The tax filing threshold varies based on your tax filing status (single, married filing jointly, head of household, etc.) and the number of dependents you have.
Example of Penalty Calculation
Let’s look at an example involving Jesse and his family. Jesse has a wife and two children, making them a family of four. Their total household income for 2024 is $150,000.
The tax filing threshold for Jesse’s family in 2024, based on the standard deduction for married filing jointly, is $29,200.
- Flat amount calculation: $900 per adult and $450 per child, so ($900 x 2) + ($450 x 2) = $2,700
- Percentage of household income calculation: 2.5% of the household income exceeding the tax filing threshold, so ($150,000 – $29,200) x 0.025 = $3,020
In this case, since the percentage of household income calculation is higher than the flat amount, the penalty for Jesse’s family is $3,020.
Penalty Calculation for Partial Coverage
Let’s consider a scenario where Jesse’s family had health insurance coverage for 7 months in 2024 but lacked coverage for 5 months. Here’s how the penalty would be calculated:
First, calculate the total annual penalty amount.
- Flat amount calculation: ($900 x 2) + ($450 x 2) = $2,700
- Percentage of household income calculation: ($150,000 – $29,200) x 0.025 = $3,020
Next, prorate the penalty based on the number of months without coverage.
- Prorated flat amount calculation: $2,700 ÷ 12 months x 5 months = $1,125
- Prorated percentage of household income calculation: $3,020 ÷ 12 months x 5 months = $1,258.33
Since the prorated percentage of household income calculation is higher, the penalty for Jesse’s family would be $1,258.33.
If You Can’t Afford Health Insurance Premiums
If you find health insurance premiums too high to afford, financial assistance is available through Covered California. Support is provided based on family size, age, income, and region. Additionally, low-cost or free coverage options are available through Medi-Cal programs. For more details, visit Covered California.
Summary
Having health insurance coverage is crucial for protecting your and your family’s health. Since 2020, California has required all residents to obtain health insurance coverage. If you cannot secure qualifying coverage, you may avoid penalties by applying for specific exemptions. To estimate the penalty amount, use the Penalty Estimator tool. Ensure you have the correct information to secure appropriate coverage. If health insurance premiums are too high, financial assistance is available through Covered California. Take the necessary steps to protect both your health and your finances.
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