Orlando Harmon
The penalty for not having health insurance, sometimes called the Shared Responsibility Payment, ended at the federal level in the US in 2018. However, some states have since implemented their own health coverage requirements with penalties for non-compliance. These include California, Massachusetts, New Jersey, Rhode Island, and Washington DC. The penalties vary, but in California, for example, the penalty for not having coverage for the entire year is at least $900 per adult and $450 per dependent child under 18.
| Characteristics | Values |
|---|---|
| Federal penalty for not having health insurance | Ended in 2018 |
| States with their own mandates and penalties | California, New Jersey, DC, Massachusetts, Rhode Island |
| California penalty | $900 per adult, $450 per dependent child under 18 |
| DC penalty | $695 per adult, half for a child, or 2.5% of income |
| New Jersey penalty | Flat fee or 2.5% of income |
| Massachusetts penalty | Based on income and cost of health plans |
| California exemptions | Incarceration, Native American tribe membership, general hardship, religious sect membership |
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What You'll Learn
Federal penalty no longer applies
The federal penalty for not having health insurance was eliminated at the end of 2018 under the Tax Cuts and Jobs Act of 2017. This means that the ACA's (Affordable Care Act) individual mandate penalty no longer applies, and you don't have to pay a tax penalty for not having minimum essential coverage. The last time the penalty was assessed was on tax returns filed in 2019.
However, it's important to note that some states have implemented their own health coverage requirements and penalties for residents who don't maintain coverage. These states include California, New Jersey, Massachusetts, Rhode Island, and the District of Columbia. For example, California added a tax penalty for uninsured people and businesses starting with the 2020 tax year, and the penalty is applied by the California Franchise Tax Board.
In California, you are required to have health insurance or pay a tax penalty, subject to some exceptions. You can obtain qualifying health insurance coverage through various avenues, such as employer-sponsored plans, public programs like Medi-Cal and Medicare, or private insurance companies. Lower-income families may also qualify for tax credits or subsidies that can be applied to plans from a health benefits exchange.
The penalty amount in California is at least $900 per adult and $450 per dependent child under 18, with the penalty calculated based on the tax filing status, number of dependents, and gross income. You can use the Individual Shared Responsibility Penalty Estimator tool to estimate the penalty you may owe.
While the federal penalty no longer applies, it's important to be aware of the specific requirements and penalties that may be in place in your state.
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State-level penalties exist
Although the federal penalty for not having health insurance was eliminated after 2018, some states have implemented their own health coverage requirements, with penalties for residents who don't maintain coverage. These states include California, Massachusetts, New Jersey, Rhode Island, and the District of Columbia.
California
In California, residents are required to have health insurance or face a tax penalty, known as the Individual Shared Responsibility Penalty. This penalty is assessed when filing state tax returns, and the amount owed can be estimated using the Penalty Estimator Tool provided by the California Franchise Tax Board. The penalty for 2024 is $900 per adult and $450 per dependent child under 18, with a minimum threshold for tax filing based on income.
Massachusetts
Massachusetts has had an individual mandate and penalty in place since 2006. The penalty amount is based on the person's income and the cost of health plans available through the Massachusetts health insurance exchange. For the 2023 tax year, the penalty is either a flat $695 per adult or half of that amount for a child, or 2.5% of income, whichever is higher. However, the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in Massachusetts.
New Jersey and the District of Columbia
Both New Jersey and the District of Columbia implemented individual mandates and penalties that took effect in January 2019. The penalty amounts mirror the previous federal penalty, with a flat rate per adult and half of that for children, or a percentage of income, whichever is higher. However, the maximum penalty is based on the average cost of a bronze plan in their respective regions.
Exemptions
It is important to note that certain exemptions may apply, and individuals may qualify for a waiver of the penalty. These exemptions vary by state but can include factors such as income levels, incarceration, membership in a federally recognized Native American tribe, general hardship, and religious affiliation.
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Exemptions are available
The federal individual mandate penalty was eliminated at the end of 2018, so there is no longer a federal penalty for being uninsured. However, some states have implemented their own health coverage requirements with penalties for non-compliance. These include California, Massachusetts, New Jersey, the District of Columbia, and Rhode Island. Exemptions are available for certain groups, and these vary by state.
In California, exemptions from the penalty are available for those who have qualifying health insurance coverage. This can be obtained through employer-sponsored plans, coverage purchased through Covered California or directly from insurers, Medicare, or most Medicaid plans. Lower-income families may also qualify for tax credits or subsidies that can be applied to plans from a health benefits exchange. Additionally, if your income is lower than the state tax filing requirement, you may not need to pay a penalty for not having health insurance.
In Massachusetts, the penalty only applies to adults, and the amount is based on the person's income and the cost of health plans available via the Massachusetts health insurance exchange. There may be exemptions for certain groups, but these are not explicitly stated.
New Jersey also has an individual mandate and penalty, with amounts mirroring the previous federal penalty. However, the maximum penalty under the percentage of income calculation is based on the average cost of a plan in New Jersey, rather than nationwide. It is unclear whether any exemptions are available in New Jersey.
The District of Columbia implemented an individual mandate and penalty in January 2019, with amounts based on the previous federal penalty. The maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in DC. Exemptions may be available, but these are not explicitly stated.
While there is no longer a federal penalty for being uninsured, it is important to note that the coverage requirement is still technically in effect. Additionally, the state-level penalties and exemptions may change over time, so it is essential to stay informed about the specific requirements and exemptions in your state.
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Penalty cost calculation
The penalty cost for not having health insurance, sometimes called the "Shared Responsibility Payment" or "mandate", ended in 2018 at the federal level in the US. However, some states have implemented their own health coverage requirements with penalties for residents who don't maintain coverage. These states include California, Massachusetts, New Jersey, Rhode Island, and Washington, D.C.
The penalty cost for not having health insurance varies depending on the state and the specifics of an individual's situation. For example, in California, the penalty for not having coverage for the entire year will be at least $900 per adult and $450 per dependent child under 18 when filing the 2023 state income tax return in 2024. A family of four that goes uninsured for the whole year would face a penalty of at least $2,700.
In Massachusetts, the penalty amount is based on the person's income and the cost of health plans available via the Massachusetts health insurance exchange. The penalty amounts for the 2023 tax year can be found on the state's website.
New Jersey and Washington, D.C. have implemented similar individual mandates and penalties, which took effect in January 2019. The penalty amounts mirror the previous federal penalty of a flat $695 per adult, half that for a child, or 2.5% of income, whichever is higher. However, the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in each jurisdiction.
It is important to note that these penalty costs can be avoided by obtaining qualifying health coverage. This can be done through employer-sponsored plans, coverage purchased directly from insurers, Medicare, or most Medicaid plans. Additionally, certain exemptions may apply, and individuals can refer to the exemption list provided by their state or use penalty estimator tools to determine their specific penalty amount.
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Penalty enforcement
California
California enacted legislation in 2019 that created an individual mandate with a penalty for non-compliance. The penalty for not having coverage for the entire year is at least $900 per adult and $450 per dependent child under 18. The penalty is administered by the California Franchise Tax Board. To avoid the penalty, qualifying health coverage is needed for each month of the year for yourself, your spouse or domestic partner, and your dependents.
Massachusetts
Massachusetts implemented an individual mandate and penalty in 2006, which continues to be in effect. The penalty only applies to adults, and the amount is based on the person's income and the cost of health plans available via the Massachusetts health insurance exchange.
District of Columbia
The District of Columbia implemented an individual mandate and penalty that took effect in January 2019. The penalty amounts are based on the federal penalty in 2018: a flat $695 per adult, half that for a child, or 2.5% of income, whichever is higher. The maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in DC.
New Jersey
New Jersey implemented an individual mandate and penalty that took effect in January 2019. The penalty amounts 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 the state.
Rhode Island
Rhode Island implemented an individual mandate effective in 2020, with a penalty for non-compliance. The revenue generated from the penalty is used to fund the state's reinsurance program.
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Frequently asked questions
There is no longer a federal penalty for being uninsured in the US. However, some states have implemented their own health coverage requirements and penalties for non-compliance.
States with a medical insurance penalty include California, New Jersey, Massachusetts, Rhode Island, and Washington D.C.
The penalty for not having coverage for the entire year will be at least $900 per adult and $450 per dependent child under 18. The penalty will be applied when filing your state income tax return.
The federal individual mandate penalty was eliminated at the end of 2018.
Yes, there are several exemptions to the penalty. You may be exempt if you were incarcerated, are a member of a Native American tribe, or experienced a general hardship that prevented you from obtaining insurance.
