Effective January 1, 2020, and as a result of the passage of Senate Bill (“SB”) 78, California now has a statewide healthcare mandate that is similar to the federal Affordable Care Act (“ACA”).
Like the federal ACA, California’s new mandate requires most California residents to purchase and maintain “minimum essential coverage” for healthcare. Also like the federal ACA, California’s new mandate also includes a program of financial assistance to help lower-income Californians gain access to healthcare. This assistance is provided through Covered California.
Also like the federal ACA, California has imposed a penalty – known as the “Individual Shared Responsibility Penalty” – for individuals who fail to comply with the mandate. The penalty for 2020 will be $695 per individual; the family penalty is capped at three times the individual penalty. Note, however, this new penalty is not imposed on Californians who earn incomes below the minimum threshold for filing a California tax return.
What does this mean for employers?
SB 78 does not require employers to give employees notice of this new mandate. In addition, SB 78 does not require employers to provide health insurance beyond what is already required by the federal ACA. However, for those California employers who already provide “minimum essential coverage” to their employees – whether voluntarily or as an entity required to do so under the federal ACA – these California employers will be required to file special tax returns with the California Franchise Tax Board (“FTB”). The first such returns will be due in the first quarter of 2021, following the close of the 2020 tax year.
For more information on SB 78, you can read the bill here.