Health Insurance: To Carry Or Not To Carry?

As of 2019, health insurance is not mandatory in the United States. However, some states have implemented their own individual mandates, so there are penalties for not having health insurance in California, the District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont. If you don't have health insurance, you may still want to obtain some level of coverage to help pay for medical expenses in the event of an unexpected illness or injury. Evidence suggests that uninsured people are less likely to receive healthcare and pay more for it when they do.

Is health insurance mandatory?

Health insurance is not mandatory for most Americans in 2024. While the Affordable Care Act (ACA) previously required almost all Americans to have health insurance, with a penalty fee for those who were uninsured, this is no longer the case. The individual mandate was removed in 2019, meaning that health insurance is no longer compulsory at the federal level.

However, some states have implemented their own health insurance mandates, with associated penalties for non-compliance. These include California, Washington D.C., Massachusetts, New Jersey, Rhode Island, and Vermont. The specifics of these state-level mandates vary, with some based on a percentage of income and others on a fixed fee per person.

It is important to note that while health insurance may not be legally mandatory, it is still highly recommended. Uninsured individuals are less likely to receive healthcare and often pay more when they do. Comprehensive health insurance provides access to a range of benefits and can protect against unexpected medical expenses.

What are the penalties for not having health insurance?

In 2018, the federal individual mandate penalty, also known as the "shared responsibility payment" or "mandate", was eliminated. This means that there is no longer a federal law requiring individuals to obtain health insurance or pay a penalty for non-compliance. However, some states have implemented their own health coverage requirements and penalties for residents who don't have insurance. These states include New Jersey, California, Rhode Island, Massachusetts, and the District of Columbia.

The penalty amount varies by state and can be based on income, family size, and duration without coverage. For example, in New Jersey, the penalty amounts mirror the previous federal penalty, with the maximum penalty based on the average cost of a bronze plan in the state. California's penalty for 2023 is set at $900 per adult or $450 per dependent child, or 2.5% of gross income above the state filing threshold, whichever is higher. Rhode Island's penalty for the 2023 tax year is either 2.5% of annual household income minus exemptions, or $695 per person and $347.50 per child under 18, whichever is higher.

It is important to note that some states, like Vermont, have enacted mandates but do not impose any penalties for non-compliance. Additionally, certain states offer penalty exemptions for specific circumstances, such as low income, lack of affordable coverage, or financial hardship. These exemptions vary by state and may require individuals to apply for them.

While there is no longer a federal penalty for not having health insurance, it is still important to consider the benefits of obtaining coverage. Health insurance provides protection against the risk of illness or injury and can help individuals avoid hefty medical expenses.

What are the exemptions?

In the United States, there is no longer a federal requirement to have health insurance. Since 2019, there has been no penalty for lacking health coverage. However, this exemption from the "Shared Responsibility Payment" does not apply to the states of California, the District of Columbia, and Maryland, which have their own exemption processes. If you are a resident of one of these states, you may still need to apply for an exemption.

There are two main types of exemptions: affordability and hardship. Affordability exemptions apply if the cost of the most affordable insurance plan available to you would exceed 7.97% of your household income. This type of exemption can cover future months and can last until the end of the calendar year. To obtain an affordability exemption for an entire year, you must request it before January 1 of that year. On the other hand, if you need an exemption for past months, you can apply for it when filing your tax return.

Hardship exemptions cover a wide range of circumstances, including but not limited to:

• Eviction or the risk of eviction
• Receiving a shut-off notice from a utility company
• Domestic violence
• Death of a family member
• Natural disasters that caused significant property damage
• Bankruptcy
• Substantial debt due to unpaid medical bills
• Unexpected increases in necessary living expenses due to caring for an ill or disabled family member
• Dependent child being denied Medicaid or CHIP and lacking other insurance coverage
• Reduction in income or work hours

In addition, members of federally recognized tribes and new immigrants automatically qualify for exemptions. This means that they are exempt from paying for services at Indian Health Service facilities and can access free or low-cost direct services from Indian healthcare providers or facilities.

Finally, individuals aged 30 and above who wish to enrol in a "Catastrophic" health plan must also apply for an exemption. A Catastrophic health plan is a lower-priced coverage option that protects against high medical costs in the event of a serious injury or illness. To apply for this exemption, individuals must submit an application form and obtain an Exemption Certificate Number (ECN).

How do I get health insurance?

Health insurance is not mandatory for most Americans. However, some states do require you to have health insurance, and you may pay a fee with your state taxes if you don't have coverage. These states include California, Washington D.C., Massachusetts, New Jersey, Rhode Island, and Vermont.

There are several ways to apply for and enrol in Marketplace health coverage:

• Use HealthCare.gov to apply online. This is the fastest way to apply. Log in or create an account to get started.
• Find help in your area by entering your ZIP code to get a list of local people and organisations that can help you apply for coverage. Some offer assistance in languages other than English and in-person support.
• Apply through a certified enrolment partner, such as an insurance company or online health insurance seller.
• Enrol over the phone with the help of the Marketplace Call Center, who can assist you in filling out an application, reviewing your choices, and enrolling.
• Fill out and mail in a paper application. You will receive eligibility results in the mail within two weeks.

Additionally, you can apply for health insurance through your employer, if applicable. Each employer sets its own health insurance open enrolment period, typically between October and December. Check with your human resources department for specific dates and information.

What are the different types of health insurance?

Health insurance is not mandatory for most Americans in 2024. However, some states do require you to have health insurance and may charge a fee if you don't. These include California, Washington D.C., Massachusetts, New Jersey, Rhode Island, and Vermont.

There are several different types of health insurance plans, which are designed to meet different needs. These include:

• Exclusive Provider Organization (EPO): A managed care plan where services are only covered if you use doctors, specialists, or hospitals within the plan's network (except in an emergency). EPOs offer less freedom to choose healthcare providers but result in lower premiums.
• Health Maintenance Organization (HMO): This type of plan usually limits coverage to doctors who work for or are contracted by the HMO. It generally won't cover out-of-network care except in an emergency. HMOs often provide integrated care with a focus on prevention and wellness.
• Point of Service (POS): A type of plan that offers greater freedom to choose healthcare providers, but at a higher cost. POS plans require a referral from your primary care doctor to see a specialist.
• Preferred Provider Organization (PPO): With this plan, you pay less if you use providers within the plan's network. You can use out-of-network doctors, hospitals, and providers without a referral for an additional cost.
• Catastrophic: Catastrophic policies have very high deductibles, but they must also cover the first three primary care visits and preventive care for free. These plans are only available to those under 30 years old.
• High-Deductible Health Plan (HDHP) With or Without a Health Savings Account (HSA): HDHPs are similar to catastrophic plans but are available to people of all ages. They often have higher out-of-pocket costs, but if you reach the maximum amount, the plan pays 100% of your care. An HSA is a tax-free account that can be used to pay for eligible medical expenses.

These plans are offered at different levels, including Bronze, Silver, Gold, and Platinum. Bronze plans have the least coverage and the lowest premiums, while Platinum plans offer the most coverage but come with higher premiums.

Frequently asked questions