Health insurance laws have been a big source of debate for the past several years, and as a result, they can be pretty confusing. In 2010, President Obama passed one of the most comprehensive pieces of healthcare legislation in US history, the Affordable Care Act, also known as Obamacare. The Affordable Care Act included an individual mandate requiring every citizen to enroll in health insurance or face a tax penalty.
However, a large amount of resistance to the mandate led to many proposed changes to the Affordable Care Act, including some that followed through. This has left many wondering, “is health insurance required?” The answer is a bit more complicated than you may expect.
We want to know if health insurance is mandatory because it can have a major impact on an individual’s financial health. Having adequate coverage for medical expenses can help protect people from the costs of unexpected medical procedures, as well as ongoing treatments such as prescription drugs. Furthermore, not having health insurance may leave individuals liable for any bills incurred in the case of an emergency or accident. Knowing whether or not health insurance is mandatory is an important step in making sure that everyone has the best possible protection against potential financial risks associated with illness and injury.
What Is The Individual Mandate?
The health insurance mandate began in 2014 when the Affordable Care Act went into effect. The individual mandate was created to push those who could afford health insurance into purchasing a plan. The goal of the mandate was to encourage more individuals to purchase health insurance, which would cover them in unforeseen circumstances and bring down the price of premiums for everyone. Under the original guidelines of the Affordable Care Act, anyone who did not have health insurance would be required to pay a fee to the government when they filed their tax return.
Despite the mandate being in place for several years, legislation was eventually passed to remove the individual mandate on a federal level as of 2019. This means that health insurance is no longer required on a federal level and that Americans without health insurance will not be charged a federal tax penalty. In the immediate aftermath, health insurance premiums began to rise in anticipation of fewer Americans enrolling in insurance coverage.
Which States Have Insurance Requirements in 2023?
In an effort to keep health insurance prices down, and ensure more people remain covered, some states decided to take power back into their own hands. Although there is no longer a federal health insurance mandate, some states decided to implement their own requirements. There are still several states that require residents to enroll in medical coverage as of 2022. Those states are:
- California
- Massachusetts
- New Jersey
- Rhode Island
- Vermont
- Washington DC
If you are a resident of any of the mentioned states, and you forego health coverage, you will face a tax penalty unless you qualify for an exemption. Make sure to check back, because more states already have plans to follow suit. Other states considering making health insurance mandatory include Connecticut, Maryland, and Hawaii. You can expect additional states to pass similar legislation as well.
Is There a Penalty for Not Having Health Insurance?
As of 2022, there is no penalty for not having health insurance at the federal level. However, several states have implemented their own tax penalties for those individuals without health insurance. If you live in any of the following states, here are the penalties you may be facing:
California Individual Mandate Guide
History of Legislation
California initiated its own individual mandate in 2019, which was approved by the legislature and signed by then-governor Jerry Brown. The goal of this measure is to ensure that all California residents have access to health care coverage. This new law requires most Californians to obtain health insurance or pay a penalty for not having it, except for those enrolled in an exemption program. Furthermore, the California individual mandate provides subsidies for low-income families and uninsured individuals through Medicaid expansion and regulated ACA plans. This legislation serves as an important step towards providing comprehensive health care coverage to all citizens of California.
Employer Obligations
Employers in California have a few obligations related to the individual mandate. They must provide affordable health insurance options to their employees and provide information regarding these plans on their websites. Additionally, employers must report employee coverage information to the IRS and comply with federal requirements for providing health insurance to part-time or seasonal workers. Lastly, some employers are subject to penalties if they do not offer adequate health care benefits according to the ACA’s employer shared responsibility provisions.
Penalty
If you are a resident of the state of California, and don’t have health insurance in 2022, you can expect a tax penalty of $695 per adult and $347.50 per child, or 2.5% of your annual income, whichever is higher.
District of Columbia (Washington D.C.) Individual Mandate Guide
History of Legislation
The District of Columbia (D.C.) Individual Taxpayer Health Insurance Responsibility Requirement requires individuals residing in D.C. to maintain acceptable health coverage or pay a penalty. This requirement became effective in 2019
Employer Obligations
Employers in Washington D.C. have important obligations to comply with the District of Columbia Individual Mandate. Employers must provide employees with an option to enroll in a qualifying health plan or face potential financial penalties, as well as meet deadlines for compliance. This mandate seeks to ensure that all city residents have access to quality health care and reduce the number of un-insured individuals living in D.C.
Penalty
If you are a resident of Washington DC and forego health insurance in 2022, you will be required to pay a penalty of $695 per adult and $347.50 per child, or 2.5% of your annual income, whichever is higher.
Massachusetts Individual Mandate Guide
History of Legislation
The State of Massachusetts’ individual mandate, requiring residents to have qualifying coverage throughout the year, went into effect in 2006 and predates the Affordable Care Act.
Employer Obligations
Employers in Massachusetts have been required to comply with the individual mandate since 2006. The mandate stipulates that employers with 11 or more full-time employees must make an affordable health insurance plan available to their employees, regardless of pre-existing conditions. Employers are also subject to fines for failing to meet participation targets, as well as for failure to maintain both affordability and coverage requirements. Additionally, employers must offer a regulated minimum level of health care benefits and premium contributions as part of their health plans.
Penalty
Residents of Massachusetts without health insurance in 2022 should expect to pay a tax penalty anywhere between $276 and $1,908, depending on their income. Individuals making an income less than or equal to 150% of the Federal Poverty Level are exempt from paying the penalty.
New Jersey Individual Mandate Guide
History of Legislation
The State of New Jersey’s individual mandate, requiring residents to have qualifying coverage throughout the year, went into effect on January 1, 2019. It was signed into law on May 30, 2018. The state released reporting requirements in June 2019 and continues to release more information.
Employer Obligations
Employers in New Jersey are subject to the state’s individual mandate, which requires them to provide their employees with health insurance or pay a fee of 2.5% of their payroll. Employers must also provide coverage for any full-time employee who works more than 30 hours a week and offer an affordable health plan that meets essential health benefit standards. Additionally, employers must follow specific notice requirements and timely pay claims made under the health plan.
Penalty
If you are a resident of the state of New Jersey and don’t have health insurance in 2022, you can expect a tax penalty of 2.5% of a household’s income or a per-person fee, whichever is higher. For the individual taxpayer, fees range between $695 and $3,492. The amount you owe will depend on the size of your family and the tax bracket you fall under.
Rhode Island Individual Mandate Guide
History of Legislation
The State of Rhode Island’s individual mandate, requiring residents to have qualifying coverage throughout the year, goes into effect on January 1, 2020. It was signed into law on July 5, 2019. Rhode Island issued proposed regulations outlining the employer reporting obligation.
Employer Obligations
Employers in Rhode Island are subject to the state’s individual mandate, which requires them to provide health insurance coverage for employees who work more than an average of 30 hours per week. Employers must also offer coverage options that meet essential health benefit standards and pay premiums on time. Employers must also post notices informing employees of their rights and responsibilities under the plan and timely respond to claims made by their employees.
Penalty
If you are a resident of the state of Rhode Island and don’t have health insurance in 2022, you can expect a tax penalty of $695 per adult and $347.50 per child, or 2.5% of your annual income, whichever is higher.
Vermont Individual Mandate Guide
History of Legislation
The State of Vermont individual mandate, requiring residents to have qualifying coverage throughout the year, went into effect on January 1, 2020. The law (H.696) was signed on May 28, 2018. Vermont has indicated that employer reporting is not required so long as the federal requirement to distribute 1095-C forms remains.
Employer Obligations
Employers in Vermont are subject to the state’s individual mandate, which requires them to provide workers with access to a health plan. The plan must meet essential health benefit standards, and employers must pay premiums on time. Additionally, employers must post notices informing employees of their rights and responsibilities under the plan and promptly respond to any claims filed by employees.
Penalty
If you are a resident of the state of Vermont and don’t have health insurance in 2022, the jury is still out on what you will pay. While the state has passed legislation requiring health insurance, there is no set penalty as of yet.
Individual Mandate Exemption
Those five states do offer an individual mandate exemption. To qualify for the exemption in each state individuals must demonstrate financial hardship due to medical bills, be part of a recognized religious organization, have been uninsured for less than three months in a given year, or meet certain other qualifying criteria. Exemptions can help make healthcare more accessible and reduce the burden of medical debt on individuals who are struggling financially. It is important to check with your local laws for specific details about each state’s individual mandate exemption.
Is Health Insurance Required for Me?
If you live outside of the above states, you don’t need health insurance coverage, but you won’t be doing yourself any favors by choosing to forego medical coverage. In fact, according to wide-ranging studies, including this one reported by the Kaiser Family Foundation, medical providers routinely charge people without insurance 2 to 4 times more than those with insurance coverage.
If you are relatively young and healthy, choosing not to enroll in medical coverage is risky, but understandable. However, if you don’t fall into the young or healthy category, choosing not to enroll in a health plan is an incredibly risky move that could send you spiraling into medical debt. Anyone can face an unexpected accident or be suddenly diagnosed with an expensive health condition, making it a good idea to have coverage.
Ultimately, the answer to the question is no, unless you live in a state where it is required, you do not need health insurance, but it’s always a good idea to stay covered.
Frequently Asked Questions
Is there a tax penalty for having a gap in my insurance?
Having a gap in health insurance can result in a tax penalty. Individuals may be subject to the individual shared responsibility payment if they go without coverage for three months or more during the year. Those who are exempt from the mandate due to financial hardship or certain religious exemptions can avoid this penalty. The amount of the penalty varies depending on how many months went without coverage, and is calculated based on your household income and filing status. It is important to speak with an accountant or tax professional to determine if you may be affected by this penalty and how much it could cost. If you were uninsured for less than three consecutive months, then you will likely not be subject to fine in those state that require health insurance.
Why Are People Uninsured?
There are a variety of reasons why people may remain uninsured. Some individuals are unaware that they are eligible for health insurance coverage or are unable to afford the premiums. Others live in states with limited access to health insurance and can’t find an affordable plan, even with government subsidies. Additionally, some individuals may have had an unsatisfactory experience with their previous provider and decided not to pursue coverage. In any case, it is important for those who need health insurance to explore their options and understand the dangers of being uninsured.
Find an Affordable Health Insurance Plan for You
Even if there is no individual mandate in your state, it is important to consider getting health insurance. Having coverage can provide access to comprehensive care that can help protect you against both serious and minor illnesses. Additionally, some employers offer health insurance benefits to their employees, and taking advantage of these plans can save money in the long-run. Finally, having health insurance often makes it easier for individuals to find a doctor who is willing to accept their coverage and keep them healthy. Luckily, through Coverage Guru, finding the right insurance policy is now easier than ever.
Coverage Guru have already helped hundreds of thousands of Americans just like you find the coverage they need at a price they can afford, making it easy to compare plan details and prices. To get started, simply enter your zip code, answer a few questions, and find health insurance quotes in your area that fit your needs. Start comparing plans today!