Is There a Fine for Not Having Health Insurance?
The Affordable Care Act, also called ObamaCare, went into effect in 2010. In the law, there was an Individual Mandate written in, which made it a requirement for all Americans to carry a health insurance plan or else they’d be penalized by the federal government during that year’s tax season. In December 2017, the new tax legislation repealed the tax penalty so that for the year 2019, there was no federal tax penalty. However, a few states had their own Individual Mandate in place and plan to have it in place next year too.
Will I Get Fined by the State for Having No Health Insurance in 2020?
Most states have followed the lead of the federal government and only a handful of states have their own individual mandate. If you live in one of the following states, you may have to pay a tax penalty for having no health insurance in 2020:
How Much Is the Individual Mandate?
According to Kaiser Health News, in 2018 the federal fine was $695 or 2.5% of your income or whichever amount was greater. There is no federal fine any longer but the states that do impose their own individual mandate have different fines. See below for each state’s specifics.
Massachusetts Individual Mandate
Massachusetts has had an individual mandate in place since 2006. Because of the associated fines, the state has covered about 97.5% of the population in the entire state.
For 2018, the Federal Poverty Line (FPL) for an individual was $12,140; for a family of four, it was $25,100.
For 2019, people making $150 or more below the FPL do not pay a fine.
For people who make 150.1% to 200% of the FPL, the fine will be half the price of the lowest-priced ConnectorCare health insurance plan (Massacusett’s health insurance marketplace plan).
People making over 300% of the FPL will be charged half the price of the lowest-priced bronze premium health insurance plans (based on January 2019 prices).
Married couples, with or without children, will pay a sum penalty for each individual spouse.
New Jersey Individual Mandate
New Jersey’s tax penalty went into effect in 2019. If you do not have health insurance and do not qualify for an exemption, you may have to pay a tax penalty for each month without minimum coverage.
The minimum tax penalty in NJ is $695 and the maximum is $3,012 for 2019. The tax penalty is based on household income and family size. The cap on the penalty is the cost of the average bronze health insurance plan.
For a family of 5 with a combined income of $200,000, the tax penalty is anywhere between $2,085 and $9,500.
If you are not required to file taxes in 2019, you are exempt from a fine.
Washington D.C. Individual Mandate
Washington D.C.’s tax penalty went into effect in 2019 and is $695 per adult and $347.50 per child, up to $2,085 per family or 2.5% of the household income over the federal tax filing threshold, whichever is greater.
A family with 4 incomes in the sum of $100,000, would pay about $2100 per month in fines for having no health insurance.
Some people are exempt from the tax. For instance, you can file for an exemption due to financial hardship or pregnancy.
California Individual Mandate
To keep premiums about 3.2% lower in 2020, Covered California will fine those without health insurance, who can afford it, 2.5% of their household income or $696 per adult, whichever is larger.
Unless health insurance is completely rehauled, this amount will only increase in 2022 for the 2021 tax season.
Rhode Island Individual Mandate
Without coverage, Rhode Island residents will pay a fine unless they are exempt. Rhode Island’s penalty is $695 for each uninsured adult and $347.50 for each uninsured child or 2.5% of the household income, whichever is greater.
There is a maximum fine of $2,085 per family or the average cost of a bronze plan in Rhode Island.
Vermont Individual Mandate
In 2020 the Vermont individual mandate will go into effect for those who have no health insurance. It’s still not clear, however, what that penalty will be.
How Can I Avoid the Individual Mandate Tax?
It’s easy to find affordable health insurance and the penalty for not having any is often not that much less than having the peace of mind that you have a cap on your medical bills. If you are suddenly injured or if you fall ill, the cost of not having any coverage can be devastating. Medical bankruptcy is a serious problem that plagues many Americans.
It’s a good idea to compare health insurance quotes if you’re interested in purchasing a plan to avoid fines next tax season. We can help. If you missed Open Enrollment, you may have a qualifying event that makes you eligible to apply past the deadline.
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It’s always a good idea to get acquainted with the way plans are set up and what you’re responsible to pay before open enrollment which takes place in late fall. If you have a qualifying event, like a new job or if you’ve moved, had a baby, gotten divorced or had any life change that affect your coverage, you may be able to buy a new health insurance plan today.
Like auto and homeowners insurance healthcare insurance also has a deductible which needs to be paid before insurance begins to cover expenses. However, healthcare deductibles work a little differently. For instance, your healthcare insurance will pay for some services even before you meet your deductible.
You may be shopping for health insurance because you got a new job, which doesn’t offer health insurance. Some people even prefer to have a health plan separate from their jobs. It’s usually a more expensive option to buy an individual health insurance policy when an employer offers to pay a portion of your premiums each month. However, some people prefer to choose their own insurance company and a plan that fits their needs.