After January 1st, 2014, all California residents are going to be required to have health insurance coverage, either through an employer-sponsored program, or an individual plan. Eligible plans also include COBRA, any plan that is part of your retirement, and public assistance programs like Medicaid and Medicare. There are many affordable health insurance plans available to fit with any income level, as well as tax incentives and subsidies designed to lower the premiums for your coverage.
It should be pointed out that if you do not obtain coverage, you do risk paying a penalty. The amount of the penalty for 2014 is either 1 percent of your taxable income, or $95 per adult and $47.50 per child in your household — whichever amount is greater. The government will collect the penalty by prorating the number of months you did not have coverage. All assessed penalties are collected through your federal tax return.
For example, if you are married and have two children, earned $50,000 during 2014 and did not have health insurance coverage, your penalty would be $500, because one percent of your income is greater than $285. But, penalties are going to increase, over the next several years. By 2016, the currently scheduled fines are going to be $695 per adult and $347.50 per child, or 2.5 percent of your income, whichever amount is greater. Using our same example of earning $50,000 during the year, you end up paying $2,085 on your federal return. In the event you are entitled to a refund, your refund amount is reduced by the penalty for not carrying insurance. However, if you had signed up for affordable health insurance coverage, you premiums for a Silver Plan are estimated to be only $280, with the available tax credits.