Penalty and Exemptions

Covered California can help you avoid the penalty.

Beginning in 2020, having health coverage is the law. If you don’t have it, you may have to pay a penalty to the California Franchise Tax Board.

We’re here to help you avoid the penalty. For the first time ever, the state is now offering extra financial help to make health coverage more affordable. Already, half a million people with lower incomes are seeing average savings of $600 a month.

About the Penalty

A typical family of four that goes uninsured for the whole year would face a penalty of at least $2,000. But with the new financial help, eligible households are getting an average of $504 per month, lowering their monthly premium by nearly half. That’s why it pays to see how affordable your coverage can be and avoid the penalty.

Starting in 2020, California residents must either:

  • Have qualifying health insurance coverage, or
  • Pay a penalty when filing a state tax return, or
  • Get an exemption from the requirement to have coverage.

Generally speaking, the penalty will be $695 per each adult and $347.50 per each dependent child under 18 in the household (up to $2,085 per family) or more when you file your 2020 state income tax return in 2021. The penalty will be applied by the California Franchise Tax Board when you file your state tax return. For information about the penalty, including the amount your family could owe for not having coverage in 2020, visit the Franchise Tax Board’s website.

You are allowed a gap of three consecutive months without penalty, unless you qualify for an exemption. Partial-month coverage counts as full-month coverage.

Types of Exemptions

You can get an exemption so that you won’t have to pay a penalty for not having qualifying health insurance.

There are some exemptions you must apply for through Covered California. Other exemptions do not require an application – instead, you can claim them when you file your state tax return.

If you want an exemption because health insurance was too expensive in the past, we recommend that you check again. Financial help can change every year, making plans more affordable. To see if you qualify for financial help for a health plan, use our Shop and Compare tool. While the penalties can be steep, the biggest penalty is putting your health and finances at risk because you don’t have insurance.

Exemptions You Can Claim When You File State Taxes

You can claim the following exemptions on your California state income tax return:

  • Income below the state tax filing threshold (you may still choose to file taxes).
  • A short coverage gap of 3 consecutive months or less.
  • Health coverage is unaffordable, based on actual income reported on your state income tax return when filing taxes.
    • Individual: Cost of the lowest cost Bronze plan through Covered California or the lowest cost employer-sponsored employee-only plan is more than 8.24 percent of income on the tax return.
    • Household: Cost of the lowest cost employer-sponsored family plan that covers all employee’s dependents is more than 8.24 percent of income on the tax return.
  • Certain non-citizens who are not lawfully present.
  • Citizens living abroad or residents of another state.
  • Members of a healthcare sharing ministry.
  • American Indians or Alaska Natives.
  • Incarceration (in jail – other than incarceration pending the disposition of charges).
  • Enrolled in limited or restricted-scope Medi-Cal or other similar coverage.

To learn more, please visit the California Franchise Tax Board.

Exemptions You Can Apply for Through Covered California

Covered California will process exemptions for the following reasons:

Document iconReligious Conscience Exemption Application

Document iconAffordability Hardship Exemption Application

Document iconGeneral Hardship Exemption Application

Minimum Coverage Available for Certain Exemptions

Minimum coverage plans, also called catastrophic plans, are available to consumers under the age of 30. Consumers age 30 or older can buy catastrophic coverage if they apply for an affordability or general hardship exemption through Covered California and are approved. If approved, these consumers will get an Exemption Certificate Number (ECN) and may buy a catastrophic plan directly from an insurance company.

If you are seeking an exemption to buy a catastrophic plan, consider buying a Bronze plan instead. There are many reasons that a Bronze plan could be a better choice:  

  • The premium (monthly cost) of Bronze plans and catastrophic plans are often similar.
  • Your deductible (the amount you pay before your insurance begins to pay) is usually lower on a Bronze plan.
  • You may qualify for financial help to reduce the cost of a Bronze plan (financial help is not available for catastrophic plans). 
  • You don’t have to apply for an exemption – people of all ages can buy a Bronze plan.

To see if you qualify for financial help and learn more about Bronze plans, visit our Shop and Compare tool.