Orlando Harmon
While health insurance is not mandatory at the federal level in the USA, going without coverage is not recommended. This is because uninsured people are less likely to access care and are more likely to delay or forgo it due to high costs. Uninsured people often face unaffordable medical bills, which can quickly lead to medical debt. Certain states have health insurance mandates to encourage coverage, and some states have implemented individual mandates requiring residents to have health insurance or face a penalty. These include New Jersey, California, Rhode Island, Massachusetts, and the District of Columbia. The fee for not having health insurance ended in 2018, but specific state mandates and penalties vary, so it is essential to check with your state's health insurance department.
| Characteristics | Values |
|---|---|
| Federal requirement for health insurance | No |
| States requiring health insurance | New Jersey, California, Rhode Island, Massachusetts, and the District of Columbia |
| States recommending health insurance | Vermont |
| Penalty for not having health insurance | No longer applicable since 2018 |
| Previous penalty amount | Up to $695 per uninsured adult or 2.5% of their household income |
| People without insurance | Mostly from low-income families |
| Reason for not having insurance | High cost of insurance |
| Effect of no insurance | Less access to healthcare, higher medical debt |
| Medicaid continuous enrollment provision | Ended on March 31, 2023 |
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What You'll Learn
The No Surprises Act and your rights
In the United States, most working-age adults obtain health insurance through their employer. However, not all workers are offered employer-sponsored coverage, and some may not be able to afford their share of the premiums. The high cost of insurance is the main reason many people are uninsured.
The No Surprises Act (NSA) was passed to protect people from receiving surprise medical bills. A surprise medical bill is an unexpected bill from an out-of-network provider or facility. This can occur when a patient receives services from a healthcare provider or facility that they did not know was out-of-network (i.e., had not negotiated a reimbursement rate with their insurance company) until they were billed.
The NSA protects people covered under group and individual health plans from receiving surprise medical bills when they receive most emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance service providers. It bans out-of-network providers and facilities from sending consumers bills for amounts beyond in-network costs and standard fees like deductibles and co-pays. It also requires healthcare providers to give a "good faith" estimate of the cost of care upfront before the patient receives treatment.
If you have a question about the No Surprises Act or believe the law isn't being followed, you can take action by contacting the Centers for Medicare & Medicaid Services No Surprises Help Desk at 1-800-985-3059 from 8 am to 8 pm EST, 7 days a week, or by submitting a complaint online.
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Exemptions from fees/penalties for not having coverage
While health insurance is not mandatory at the federal level in the USA, going without coverage leaves you vulnerable to high medical costs in the event of illness or injury. Some states have their own individual mandates, so it's important to check your state's specific regulations.
The Affordable Care Act (ACA) previously included a federal mandate that required individuals to have health insurance coverage or face a financial penalty unless they qualified for an exemption. However, this federal mandate was effectively revoked in 2019, and the fee for not having health insurance ended in 2018. As a result, you no longer need to apply for an exemption to avoid paying a tax penalty.
Despite the removal of the federal mandate, it is still important to consider the financial implications of being uninsured. Uninsured individuals often face unaffordable medical bills and are more likely to delay or forgo care due to costs. In addition, nearly six in ten uninsured individuals in 2023 were eligible for financial assistance through Medicaid or subsidized Marketplace coverage. Therefore, it is advisable to explore affordable health insurance plans to ensure access to necessary medical care while managing costs effectively.
If you are seeking exemptions from fees or penalties for not having health insurance coverage, it is important to note that these vary by state. Many states provide exemptions and hardship waivers for individuals who cannot afford insurance or have other specific circumstances that prevent them from obtaining coverage. For example, if you live in Maryland, you can visit the Maryland Health Connection website to learn more about exemptions, obtain exemption forms, and understand how to apply. Similarly, California has a state-specific penalty for not having health insurance, and you can use the state's Penalty Estimator Tool to determine the potential financial consequences.
In summary, while there is no longer a federal penalty for not having health insurance in the USA, state-specific regulations and financial implications vary. It is important to explore affordable health insurance options and understand the potential consequences of remaining uninsured in your specific state.
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Eligibility for financial assistance
The Affordable Care Act (ACA) established a methodology for determining income eligibility for Medicaid based on Modified Adjusted Gross Income (MAGI). MAGI is used to determine financial eligibility for Medicaid, CHIP, and premium tax credits and cost-sharing reductions available through the health insurance marketplace. Low-income families, qualified pregnant women and children, and individuals receiving Supplemental Security Income (SSI) are examples of mandatory eligibility groups for Medicaid.
Medicaid covers many low-income individuals, especially children, but eligibility for adults remains limited in most states that have not adopted the ACA expansion. In 2023, nearly six in ten (14.5 million) uninsured individuals were eligible for financial assistance either through Medicaid or through subsidized Marketplace coverage. However, over four in ten uninsured individuals are outside the reach of the ACA because their state did not expand Medicaid, they have an ineligible immigration status, or they were deemed to have access to an affordable Marketplace plan or offer of employer coverage.
If you are eligible for Medicare, you can get help paying for your prescriptions through Medicare Part D. There are also Medicare Savings Programs that may be able to help with Part A and Part B premiums, deductibles, coinsurance, and copayments. Charity care programs may assist with remaining costs after health insurance or Medicaid payments have been applied.
State social services agencies provide direct assistance to people with limited access to healthcare and can offer referrals to local health centers and organizations that may be able to help. Additionally, the National Breast and Cervical Cancer Early Detection Program (NBCCEDP) offers free or low-cost screenings based on income, age, and insurance status. The Ryan White HIV/AIDS Program provides help with medications and treatments based on income, and individuals must be uninsured or have treatments that are not covered by their insurance plan.
You can also use the benefit finder tool to learn about government programs to help pay for phone, internet, and energy bills, as well as rental and buyer assistance programs. If you live in Maryland, you can also visit Maryland Health Connection for information on exemptions and learn how to apply. It is important to note that as of 2018, there is no longer a tax penalty for not having health coverage.
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State-based requirements and penalties
While health insurance is not federally mandated for adults in the United States, certain states have implemented their own health insurance requirements and penalties for non-compliance. These state-based mandates are designed to increase the number of insured individuals, improve access to healthcare services, and reduce the strain on healthcare systems. Here is an overview of the requirements and penalties in some of these states:
California
California residents are required by law to have health insurance coverage. The state's individual mandate, enacted in 2019, requires residents to have either minimum essential coverage or qualify for an exemption. The penalty for non-compliance is determined by the California Franchise Tax Board and is based on household size and income. For 2023, the penalty is set at $900 per adult and $450 per dependent child, or 2.5% of gross income exceeding the state filing threshold, whichever is higher. California offers a Penalty Estimator Tool to help residents estimate their potential penalty.
Massachusetts
Massachusetts has had an individual mandate and penalty in place since 2006. The penalty, which applies only to adults, is calculated based on the person's income and the cost of health plans available through the Massachusetts health insurance exchange.
Rhode Island
Rhode Island implemented an individual mandate in 2020, requiring residents to have qualifying health insurance coverage such as employer-sponsored plans, Medicare, Medicaid, or plans purchased through the state-based marketplace, HealthSource RI. Residents who do not have health insurance are subject to a penalty when filing their income taxes. The penalty amount is based on factors such as income and family size.
New Jersey
New Jersey has a penalty for residents who do not have health insurance. The state uses penalty revenue to fund its reinsurance program. The penalty amount is calculated based on a percentage of household income, with a maximum penalty based on the average cost of a bronze-level plan.
Vermont
Vermont has an individual mandate that took effect in 2020, requiring residents over 18 to report their health insurance coverage on state taxes. However, unlike other states, Vermont does not impose a penalty for non-compliance. The state recommends that residents obtain health insurance and provides access to its state-based marketplace, Vermont Health Connect.
It is important to note that the specifics of state mandates and penalties may change over time, and there are other states considering implementing similar requirements. Therefore, it is essential to stay informed about the regulations in your specific state and consult official sources or qualified professionals for the most up-to-date and accurate information.
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How not having insurance affects healthcare access
In the United States, about one in ten people do not have health insurance. Since the "Shared Responsibility Payment" or "mandate" ended in 2018, there is no longer a tax penalty for not having health coverage. However, not having insurance can significantly impact a person's access to healthcare.
People without insurance are less likely to access healthcare and more likely to delay or forgo it due to the costs involved. Uninsured people often face unaffordable medical bills, and nearly half of uninsured adults report difficulty affording healthcare costs. This can quickly lead to medical debt, as most uninsured people have low or moderate incomes and little to no savings.
A majority of working-age adults in the US obtain health insurance through their employer. However, not all workers are offered employer-sponsored coverage, and some cannot afford their share of the premiums. Medicaid covers many low-income individuals, especially children, but eligibility for adults is limited in most states that have not adopted the Affordable Care Act (ACA) expansion. Marketplace subsidies can make coverage more affordable, but even with subsidies, it may still be unaffordable for some.
Financial assistance is available under the ACA for many uninsured individuals, but not everyone is eligible for free or subsidized coverage. Some may be ineligible due to their state not expanding Medicaid, their immigration status, or having access to an affordable Marketplace plan or employer coverage. As a result, uninsured adults are more likely to postpone or go without healthcare due to cost concerns. This can ultimately impact their health outcomes, as research has linked Medicaid expansion to improved health outcomes, including lower mortality rates from cancer, cardiovascular disease, liver disease, and maternal mortality.
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Frequently asked questions
Uninsured people often face unaffordable medical bills when they seek care. Nearly half (49%) of uninsured adults say they have difficulty affording health care costs, which can quickly lead to medical debt.
Uninsured people are less likely to access care and more likely to delay or forgo it due to costs. They are also more likely to be diagnosed with certain cancers that would have been detected earlier by screening and are therefore more likely to die from cancer or suffer poorer health outcomes.
No, you don't. The fee for not having health insurance (sometimes called the "Shared Responsibility Payment" or "mandate") ended in 2018.
