Six states now require residents to have health insurance coverage in 2020 or they may pay an increased state tax penalty. California, Massachusetts, New Jersey, Rhode Island, Vermont and Washington DC have laws similar to the Affordable Care Act health insurance requirement that expired last year. Other states are expected to follow this trend if the federal government does not set a national standard. (At Freedom Benefits we have long advocated that this should be a state-controlled and not federal legal issue).
Most types of insurance including Medicare, Medicaid and employer-sponsored coverage satisfy the coverage requirement. Many exceptions to the penalty are built into the law for people with lower income
, where insurance is too expensive, or who otherwise cannot be covered by insurance.If you live in one of these states and aren’t covered in 2020, the possible penalty is calculated when you file your 2020 tax return in 2021. The penalty is $695 for an adult and half that much for dependent children. Some people with higher incomes have to pay 2.5% of their income. Health insurance generally costs 5% to 10% of income so some people still prefer the less expensive option of paying the penalty.
Freedom Benefits works with individuals to find affordable coverage or find a way to avoid the penalty
, including filing the tax return with the proper notations to avoid the extra tax.
Qualifying small business employers can now customize their benefits and save money in the process.