The Governor of California has signed a bill that will institute a health insurance individual mandate – requiring California residents to maintain minimum essential coverage (MEC), as was construed under Affordable Care Act, for themselves and their dependents. Failure to do so will result in the imposition of a penalty, to be determined by the California Health Benefit Exchange. The Franchise Tax Board (FTB) will revise relevant forms to accommodate coverage reporting requirements and penalties. This mandate will take effect in 2020, with reporting requirements beginning in 2021.
The information to be reported will be the same as that which was required under IRC § 6055 from “applicable entities,” i.e. those providing coverage, including insurance carriers and employer-sponsored health coverage – in addition to new information as will be announced by the FTB at a later date. The specifics of such additional reporting obligations have not yet been finalized. The annual deadline for this reporting will be March 31, starting in 2021. Failure to report may result in a penalty to the reporting entity of $50 per applicable individual; however, this penalty is subject to changes by the FTB.