Key takeaways
- The federal individual mandate penalty was eliminated at the end of 2018.
- There is a penalty in New Jersey, DC, Massachusetts, California, and Rhode Island.
- Vermont enacted a mandate that took effect in 2020, but there is no penalty for non-compliance.
- Maryland lawmakers also removed mandate penalty language from a 2019 bill before it passed.
Is there still a penalty for being uninsured?
In most states, there is no longer a penalty for being without health insurance. The ACA’s federal tax penalty for not having minimum essential coverage was eliminated after the end of 2018, under the terms of the Tax Cuts and Jobs Act of 2017. Technically, the coverage requirement is still in effect, but there’s no longer a federal penalty for non-compliance. However, some states have implemented their own health coverage requirements, with penalties for residents who don’t maintain coverage.
DC, Massachusetts, New Jersey, California, and Rhode Island have penalties for being uninsured
Although the IRS is not penalizing people who are uninsured in 2019 and beyond, states still have the option to do so. A handful of states have their own individual mandates and penalties for non-compliance:
- Massachusetts implemented an individual mandate and penalty in 2006, and it continues to be in effect (people who were uninsured in Massachusetts between 2014 and 2018 didn’t have to pay both the state and federal penalties, but now that there’s no federal penalty, the state’s penalty applies just like it did prior to 2014). The Massachusetts penalty only applies to adults, and the amount of the penalty is based on the person’s income and the cost of health plans available via the Massachusetts health insurance exchange (here are the details for Massachusetts penalty amounts for the 2023 tax year).
- The District of Columbia implemented an individual mandate and penalty that took effect in January 2019. The penalty amounts are based on the amounts that applied under the federal penalty in 2018 (a flat $695 per adult — half that for a child — or 2.5 % of income, whichever is higher), although the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in DC, as opposed to the average nationwide cost of a bronze plan.
- New Jersey also implemented an individual mandate and penalty that took effect in January 2019. The penalty amounts also mirror the previous federal penalty, but the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in New Jersey. Here are New Jersey’s calculators for determining the penalty amount for each year. The state is using penalty revenue to help fund its new reinsurance program.
- California enacted legislation in 2019 that created an individual mandate starting in 2020, with a penalty for non-compliance. California is using revenue from this program to offer additional state-funded health insurance subsidies.
- Rhode Island also implemented an individual mandate effective in 2020, with a penalty for non-compliance. The revenue generated from the penalty is used to help fund the state’s reinsurance program. Both the individual mandate and the reinsurance program were designed to have a stabilizing effect on Rhode Island’s individual/family market.
Vermont enacted a mandate but opted not to impose any penalty for non-compliance
Vermont enacted legislation in 2018 to create a state-based individual mandate, but they scheduled it to take effect in 2020, instead of 2019, as the penalty details weren’t included in the 2018 legislation and were left instead for lawmakers to work out during the 2019 session. However, the penalty language was ultimately stripped out of the 2019 legislation (H.524) and the version that passed did not include any penalty. So although Vermont does technically have an individual mandate, there is no penalty for non-compliance (ie, essentially the same thing that applies at the federal level).
Maryland also removed penalty language from 2019 legislation
Maryland enacted HB814/SB802 in 2019. The legislation initially included an individual mandate and penalty that would have taken effect in 2021. But that portion of the bill was removed before passage, despite support from insurers and the Maryland Hospital Association, and the final version did not include any of the original mandate penalty language. Instead, the new law created an “easy enrollment health insurance program” that uses tax return data to identify people who are uninsured and interested in obtaining health coverage, and then connect them with the Maryland health insurance exchange (more details here, in the fiscal note). Since then, several additional states have created similar “easy enrollment” programs, using the state tax return to connect uninsured people with health coverage.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
FAQs
In most states, there is no longer a penalty for being without health insurance. The ACA's federal tax penalty for not having minimum essential coverage was eliminated after the end of 2018, under the terms of the Tax Cuts and Jobs Act of 2017.
Is there a penalty for no insurance in the US? ›
There is no longer a federal penalty for not having health insurance. But in DC, Massachusetts, New Jersey, Rhode Island, and California, the state imposes its own penalty (collected via state tax returns) if a person doesn't maintain health insurance and isn't eligible for an exemption.
What states penalty for no health insurance? ›
New Jersey, California, Rhode Island, Massachusetts, and the District of Columbia require their residents to have health insurance coverage or face penalties. Vermont recommends that residents have coverage, but there's no noncompliance penalty.
What happens if you are uninsured in the US? ›
If you don't have health insurance, you're at much greater risk of accumulating medical bills that you may not be able to pay. In a worst-case scenario, you could be sued and have your wages garnished. You might even be forced into bankruptcy.
How much does IRS charge for no health insurance? ›
The fee for not having health insurance (sometimes called the "Shared Responsibility Payment" or "mandate”) ended in 2018. This means you no longer pay a tax penalty for not having health coverage.
What states is it illegal to not have car insurance? ›
In every state — except for Virginia and New Hampshire — drivers are required to carry some form of auto insurance. If you get caught driving without insurance in state that requires it, you can be subject to large fines, the cancellation of your license or car registration and even jail time.
How long can you go without health insurance in the US? ›
If you were uninsured for a short period of time, you may qualify for an exemption from the requirement to have health coverage. What is a “Short Gap” in Coverage? A “short gap” means you were uninsured for a period of less than three consecutive months during the year.
Is it legal to stay in US without health insurance? ›
There currently is no federal law that makes health insurance a legal requirement. However, a few states across the U.S. make it mandatory to have healthcare coverage. If you live in a state where having health insurance is the law, you will have to pay a tax penalty for not complying.
Are you forced to have health insurance in the US? ›
Key Takeaways
Health insurance coverage is no longer mandatory at the federal level, as of Jan. 1, 2019. Some states still require you to have health insurance coverage to avoid a tax penalty.
Is the individual mandate still in effect? ›
The individual mandate — which requires most Americans to maintain health coverage — still exists. But starting with the 2019 tax year, there is no longer a federal penalty for non-compliance with the individual mandate.
Hospitals must treat you in an emergency
If you have a serious medical problem, hospitals must treat you regardless of whether you have insurance. This includes situations that meet the definition of an emergency.
Why are Americans still uninsured? ›
Why are people uninsured? Despite policy efforts to improve the affordability of coverage, many uninsured people cite the high cost of insurance as the main reason they lack coverage. In 2022, 64% of uninsured nonelderly adults said that they were uninsured because the cost of coverage was too high.
Who pays for uninsured patients in the US? ›
Sixty percent of governmental support for uncompensated care in hospitals is federal, through Medicare and Medicaid disproportionate share hospital (DSH) payments to general hospitals, a portion of Medicare payments for indirect medical education that supports services to medically indigent patients, and other ...
Are Americans still required to have health insurance? ›
As of 2022, only five states (California, Massachusetts, Rhode Island, New Jersey and Vermont) and the District of Columbia require all eligible residents to declare annual proof of health insurance coverage on state taxes.
How many months can you not have health insurance to avoid penalties? ›
There are exemptions for reasons such as living only part of the year in California, reporting a hardship or going without coverage less than three months. People can also seek an exemption if health coverage is considered unaffordable, if that coverage would cost more than 8.17% of their household income.
Does the IRS tax you if you don't have health insurance? ›
If you are a Californian with no health insurance, you may face a tax penalty when you file. Though there is no uninsured tax penalty on a federal level, individual states, like California, can still implement mandates. You may still need to pay a tax penalty if you live in California and do not have health insurance.
What happens if you drive without insurance in USA? ›
In most states, driving while uninsured is considered a misdemeanor offense, and can potentially lead to a prison sentence. Jail time will most likely not be imposed for a first offense, unless you cause a serious accident. But repeat offenses will incur higher fines and stiffer punishments, possibly including jail.
Is insurance mandatory in USA? ›
While there is no federal requirement for adults to have health insurance, it's essential to consider the importance of having coverage to protect your health and finances in the event of unexpected medical expenses.
