Is it mandatory to have health insurance? Many people risk having limited access to good healthcare, simply because they feel they cannot afford it. But health insurance is a necessity of life that no one can afford to disregard. In fact, in recent years, you could be penalized for not having it.
Since 2019, there is no longer a federal penalty for not having health insurance. While this may sound like great news, some US states still have penalties for uninsured individuals.
Are you required to have health insurance in your state, and what will happen if you don’t? Is there a tax penalty for no insurance? See our guide below to find out who these states with individual mandates are, and what the penalties are for the uninsured.
Health Insurance Coverage Mandates
Five US states and one district still have individual mandates for health insurance coverage. These are the states of Massachusetts, Vermont, Rhode Island, California, and New Jersey, as well as the District of Columbia.
Vermont, however, does not issue a penalty for a lack of insurance coverage. What is necessary there, however, is a declaration in their state taxes that they don’t have access to health coverage. The state assists these individuals to obtain health insurance.
Tax Penalties For The Uninsured By State
These are the mandates and penalties found in the aforementioned states and district. Usually, in cases where you were insured for part of a year, penalties only apply to the months you have been uninsured.
Massachusetts
The state of Massachusetts has had its mandate since 2006, and it remains in force. This mandate was lifted while the federal mandate was in place, but was reinstated when the federal mandate was scrapped.
Any uninsured individual may be subject to a penalty based on their income and the cost of plans available in the health insurance exchange. But certain conditions apply.
If your income is less than 150% of the poverty level, you will not be subject to a penalty for a lack of health insurance coverage. However, if your income is between 150.1-300% of the poverty level you’ll pay a penalty equal to half the premium for the lowest-cost ConnectorCare plan.
And if your income is over 300% of the poverty level, you’re liable for an even larger penalty. This will be equal to half the cost of the lowest-cost bronze plan available through the Massachusetts Health Connector.
Rhode Island
Rhode Island instituted its own health insurance mandate in 2020. It is modeled after the now-repealed federal mandate and follows the same requirements and penalties.
The Rhode Island penalties are simple. They amount to $695 per uninsured adult, and $347.50 per uninsured child or 2.5 % of the household income (whichever is greater).
The maximum penalty you’ll pay will be equal to the cost of the average bronze health insurance plan in Rhode Island.
California
California, too, has had an individual mandate for health insurance since 2020.
The penalty for not having health insurance here is a bit worse than in Rhode Island. It is $750 per uninsured adult and $375 per uninsured child or 2.5 % of the household income (whichever is greater).
New Jersey
When the federal mandate was repealed in 2019, New Jersey instated their own. It closely follows the directives of the earlier federal mandate, but there is one major difference.
The federal penalty correlated to the national average healthcare plan cost. The New Jersey penalty for no health insurance aligns with the average cost of a New Jersey bronze plan, but it is also dependent on household income and family size.
District of Columbia
The District of Columbia has had its mandate for health insurance since it was repealed at the federal level in 2019.
Non-compliance, unless the individual has an exemption, leads to a penalty. If residents don’t have at least the minimum essential coverage, they pay a penalty through their city taxes.
The penalty is $695 per uninsured adult and $347.50 per uninsured child or 2.5% of household income (whichever is greater). But the penalty will not exceed the average cost of a bronze plan in DC.
Health Insurance Penalty Exemptions
This is not a cut-and-dry issue. In certain instances, an exemption may apply. There are several possible grounds for exemption. Issues like financial difficulties or unexpected life events may be regarded as grounds for exemption.
These may also include low income, religious objections, or even membership in an official Native American tribe.
The low-income requirement is considered to be a total household income equal to 138-150% of the federal poverty level. But other grounds for exemption may differ from state to state.
Check with the relevant state authorities for more information about the criteria for exemptions.
Enrollment For Health Insurance
The Affordable Care Act of 2010 was created to provide access to affordable health insurance coverage for all US citizens. It has since become known as Obamacare and has made a huge difference in the lives of countless citizens.
However, certain rules apply. You have to apply during the open enrollment period, and meet certain criteria, to qualify for Obamacare. The open enrollment period for 2023 ran from November 1, 2022, and ended on the 15th of January 2023.
If you missed this enrollment period, you’ll have to wait until the next open enrollment period for subsidized health insurance. However, you may qualify for special enrollment or an alternative health insurance plan.
A life event that qualifies for special enrollment will give you 60-90 further days to apply for health insurance coverage. These life events may include marriage, divorce, the birth of a child, or moving to another state as well as other factors.
Alternatives To Health Insurance
Why do you get fined for not having health insurance? The government wants everyone to have access to good healthcare services. These penalties are a way to encourage enrollment so that no one has to suffer the burden of high medical bills.
But don’t stress if you missed the enrollment period and don’t qualify for special enrollment. You have other options.
Short-Term Insurance Plans
Short-term health insurance plans are the obvious solution when you have missed the open enrollment period for health insurance coverage.
Your reasons for missing the deadline may be as simple as changing jobs and losing your employer-sponsored coverage or moving out of state. Short-term insurance will bridge the gap until the next enrollment period.
Care Membership Programs
Care membership programs offer access to affordable curtain urgent care and essential medical services.
They may be a lot easier to apply for and cost far less than traditional health insurance plans. However, the coverage will often not be as comprehensive.
Ministry-Based & Other Cost-Sharing Health Plans
Medical expense cost-sharing plans are also gaining in popularity. Many of these are ministry-based, and as such may have their own rules and regulations for members to abide by.
But they are another popular alternative to traditional health insurance coverage for several reasons. There’s no enrollment period to worry about and your contributions will be assessed according to your finances.
Bear in mind that such plans don’t count as health insurance in the eyes of the law. And even if ministry-based, your contributions won’t count as tax-deductible donations either.
Health Insurance Frequently Asked Questions
Can I still access healthcare without health insurance?
Yes, of course. Healthcare is available to all who need it. But without health insurance, you may struggle to pay your medical bills. Health insurance is the answer to ensure you and your family have coverage.
If you just can’t access health insurance right now, there are still many free health clinics where you can get help. And you can always ask your doctor for a discounted consulting fee if you’re facing financial hardships.
Does Medi-Share count as health insurance?
No, Medi-Share doesn’t count as health insurance. Medi-Share is a ministry-based system of medical expense sharing. While it operates very similarly to health insurance, the government doesn’t recognize it as such.
That said, Medi-Share may be the solution if you missed the open enrollment period for Obamacare and are struggling to pay for medical procedures. However, note that Medi-Share doesn’t cover a large variety of procedures and consultations that health insurance does.
Can my employer enroll for health insurance on my behalf?
Yes, your employer can enroll you and your co-workers in health insurance.
If they have done so, you will not qualify for Obamacare enrollment for yourself. This is one of the criteria for Obamacare enrollment – you should not have existing coverage provided by your employer.
Conclusion
Is it mandatory to have health insurance in 2023? You won’t face a federal penalty for not having it, but you may be required by your state’s individual mandate to get insurance. However, penalty or not, you need the peace of mind that comes with health insurance coverage.
A low income or even no income is no longer a barrier to accessing health coverage. So take care of your and your family’s health, with a good health plan that you can afford.
Here at Enhance Health, we find the right plan for you. Contact us today.
