How Much Can You Be Fined for Not Having Health Insurance?
7 Minutes
Team Curative
Jan 1, 2022
Are all individuals required to have health insurance? Will you receive a fine if you don’t have a plan? This page provides an overview of health mandates across the country. Use it as a resource to understand when and where health insurance is required, plus the penalties you will potentially face if you fail to meet the criteria for coverage.
If you reside in a state where health insurance is required (or you simply plan on purchasing health insurance for the many benefits it offers you), be sure to choose a trustworthy insurance company that puts patients first. When you need to make use of healthcare services, the right provider will be able to offer you the proper coverage and access to healthcare services that you need to maintain both your physical and mental wellbeing.
What Is the Individual Mandate?
Is There a Penalty if You Don't Have Health Insurance?
Is There a Penalty for Not Having Minimum Essential Coverage?
State Health Insurance Mandates
How Do I Avoid Paying a Mandate Penalty for Not Having Health Insurance?
Exemptions From Individual Health Insurance Requirements
What Is the Individual Mandate?
The introduction of the Affordable Care Act (ACA) (sometimes referred to as “Obamacare”) introduced a “shared responsibility payment”. It required individuals to purchase health care coverage that met standards for minimum essential coverage (MEC). If the individual was not covered by such a plan, that individual would face a fine in the form of a tax penalty. The exception to this rule was if the individual received an exemption.
Is There a Penalty for Not Having Minimum Essential Coverage?
There is no longer any federal penalty for not having a healthcare plan that meets the standards for minimum essential coverage. The provision still technically exists in the ACA, but the IRS tax penalty was eliminated for the 2018 tax year and beyond due to the Tax Cuts and Jobs Act of 2017.
Despite there being no federal enforcement of the individual mandate, certain states have taken it upon themselves to implement individual mandates of their own for a variety of reasons. If you reside in one of the states listed below, you may still face a penalty if you don’t have a plan that meets your state’s criteria for minimum essential coverage.
State Health Insurance Mandates
Massachusetts
The Massachusetts insurance mandate applies to MA residents and individuals who become Massachusetts residents within 63 days who are 18 years of age or older. It applies to all individuals who meet that criteria, regardless of whether you file taxes or not. Penalties for non-compliance vary based on household income, age, and family size. Learn more about the MA individual mandate on Mass.gov.
New Jersey
New Jersey’s individual mandate is applicable to those who plan to file New Jersey income tax returns. To learn more about the mandate, click here. To view penalties for being uninsured, click here.
Vermont
Vermont asks residents about their health insurance policies on tax return forms and encourages all residents to get health insurance according to the provision found in the ACA. Currently, there is no cash penalty for non-compliance in VT.
California
Like most other states listed, California’s individual mandate requires individuals to either get an eligible health insurance plan, receive an exemption, or pay a penalty when filing for a state tax return. Click here to estimate your penalty for non-compliance. Covered California provides in-depth resources on the CA individual mandate.
Rhode Island
Rhode Island’s individual mandate is in effect as of January 1st, 2020. Unless an individual is specifically exempt from the mandate, the individual must choose between obtaining eligible health coverage and paying a fine. For more information, visit RI.gov. To perform a calculation on the amount you could pay in the form of a penalty, click here.
District of Columbia (Washington D.C.)
Washington D.C. also follows in the footsteps of the federal ACA individual mandate and requires its residents to get a plan with minimum essential coverage or pay a fine. To find coverage, click here. To learn about the penalties you will face for non-compliance, click here. In general, the maximum penalty amount you will pay is $695 for each adult and $347.50 for each child, up to $2,085 per family, or 2.5% of family income that is over the federal tax filing threshold–whichever is greater.
How Do I Avoid Paying a Mandate Penalty for Not Having Health Insurance?
Individual mandates from some states make it possible to incur a penalty via reduced state tax credits. Ensure you are fully covered for the entire year by understanding the different enrollment periods explained below.
Open Enrollment Period
The Open Enrollment Period is a part of the year in which you may enroll in or change your healthcare plan. For 2021, the Open Enrollment Period is Monday, November 1, 2021 to Saturday, January 15, 2022.
Be sure to consider all of your possible healthcare plans and enroll in one by the end of the Open Enrollment period to ensure coverage for the following year and avoid paying penalties.
Special Enrollment Period
In certain cases, you may adjust your healthcare plan throughout the year if special circumstances are present–for example, if you get married. To learn more about qualifying for the Special Enrollment Period, click here. Changing your healthcare plan outside of the Special Enrollment Period may lead to a lapse in coverage and subsequent fine from your state.
Exemptions From Individual Health Insurance Requirements
Some individuals may not face a fine for failing to enroll in a health insurance plan if certain criteria are met and the proper documentation is received by the state government. The various types of coverage exemptions are detailed below. States sometimes require individuals to submit exemptions for approval by a certain date to be eligible for an exemption for the following year. Use the links provided in the section on state health insurance mandates above to find relevant exemption information for your state.
Religious Conscience Exemption
If you are a member of an approved religious sect or division that is against accepting public health benefits, or you rely solely on a religious method of healing and the acceptance of medical health services is against your religious beliefs, you may qualify for a religious conscience exemption. Click here to learn more.
Hardship Exemption
The hardship exemption used to be for individuals who could not afford health insurance due to life circumstances such as homelessness. Now that the federal mandate has been eliminated, hardship exemptions apply to individuals over the age of 30 who wish to purchase Catastrophic health plans. Catastrophic plans provide even less coverage than Bronze plans, which, for individuals over the age of 30, is usually the lowest tier of healthcare plans that qualify for minimum essential coverage. In other words, a hardship exemption can sometimes allow you to enroll in a plan that does not meet the usual required standards, but it is not an outright exemption.
Short-term Coverage Gap
Some states allow individuals to receive exemptions for one to three months for themselves or dependent members of their family. If this exemption form is filed properly, you can choose to not be covered for a small portion of the year for whatever reason and still avoid paying a penalty.
Part of a Federally Recognized Native American Tribe
The federal mandate allowed American Indians and Alaska Natives to file for exemptions based on their special status. Today, some states, such as New York, do not offer the same type of exemption, but they do have special arrangements and subsidies for healthcare services for these specific groups of people.
Takeaway
In most states, you do not need to have health insurance and you will not face a fine if you do not have it. This is due to the individual mandate being repealed on a federal level. However, some states have implemented their own individual mandates. If you live in one of these states and you do not have an exemption, you may be forced to pay a fine, usually in the form of a tax penalty. If you live in a state where health insurance is required but you do not wish to enroll in a plan, see if you are eligible for an exemption so that you can avoid the tax penalty.
If you do choose to get health insurance, be sure to pick a health insurance company that has a convenient and digital-first approach. With easy access to healthcare services and simple management of your plan, you can visit the doctors and specialists you need to, when you need to, without experiencing any unnecessary hassles on your end.
