Covered California Certified Enroller Practice Exam

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Can individuals be penalized at the federal level for not having Minimum Essential Coverage when filing taxes?

Yes, they can be penalized by both state and federal authorities
No, they will only be penalized by the state of California
Only if they owe taxes
Yes, they can only be penalized by the federal government

The correct answer is: No, they will only be penalized by the state of California

The correct understanding revolves around the fact that under the Affordable Care Act (ACA), the federal tax penalty for not having Minimum Essential Coverage was eliminated starting in 2019. As a result, individuals are not facing penalties from the federal government when filing their taxes regarding their health insurance coverage for these years. In California, while there is a state-specific individual mandate requiring residents to have health insurance, penalties for not complying with this mandate are administered at the state level, not the federal level. Therefore, individuals can only be subject to penalties from state authorities in California if they do not have Minimum Essential Coverage, rather than facing federal penalties. This aligns with the structure of health coverage regulations and the evolving policies around ACA mandates, emphasizing the distinction between federal and state requirements regarding health insurance. Other choices may imply a federal penalty that is no longer applicable, or suggest that penalties apply only under specific conditions that are not relevant under the current legislation.