Is Health Insurance Mandatory? (2024)

Health insurance is not mandatory at the federal level. Some states may impose a tax penalty if you do not have health insurance, but the federal government no longer does that. This changed at the start of 2019. Of course, while no health insurance can save you money now, it could cost you a lot if you get sick or hurt in the future. Here's what you need to know about health insurance and mandates over time.

Key Takeaways

  • Health insurance coverage is no longer mandatory at the federal level, as of Jan. 1, 2019.
  • Some states still require you to have health insurance coverage to avoid a tax penalty.
  • Going without health insurance saves you money since you’re not paying premiums, but it could put you at financial risk if you get injured or develop a serious illness.

Affordable Care Act’s Coverage Mandate

The Affordable Care Act (ACA), signed into law in 2010, was designed to make health insurance coverage more affordable for Americans through the creation of tax subsidies while also opening up Medicaid eligibility to more low-income individuals and families.

The ACA effectively made having health insurance mandatory—not having it meant you would incur a tax penalty. But what about now? What is the penalty for not having health insurance?

Well, there is none now. As of Jan. 1, 2019, there is no mandate for health insurance at the federal level.

Before 2019, under the ACA, also called Obamacare, U.S. adults who were not otherwise eligible for an exemption were required to have health insurance coverage for themselves and their families. Failure to have minimum health insurance triggered a tax penalty. At the same time, the ACA allowed for the creation of a premium tax credit to help Americans offset some of the cost of getting health insurance through the Health Insurance Marketplace.

This rule changed in 2019 when the tax penalty mandate for health insurance was eliminated. While the ACA technically still exists, U.S. adults who choose not to maintain health insurance for themselves or their family members in 2019 and beyond won’t be penalized at tax time.

State-Imposed Rules on Health Insurance Coverage

While the federal government no longer requires you to have health insurance, a handful of states have mandates on the books regarding coverage or are trying to pass laws to make health insurance mandatory.

The states that require coverage include:

  • California
  • Massachusetts
  • New Jersey
  • Rhode Island
  • Vermont

Washington, D.C., also requires residents to purchase health insurance. Other states—including Connecticut, Hawaii, Maryland, Minnesota, and Washington state—have also attempted to pass legislation that would make health insurance mandatory for their residents.

In states where health insurance is mandatory, the rules for getting and maintaining coverage are similar to those under the ACA, with coverage available through state-run health insurance marketplaces.

No Mandatory Health Insurance: Advantages

The primary upside to health insurance no longer being mandatory at the federal level is the money you don’t have to spend on premiums that remains in your pocket. That could be helpful if you’re trying to pay off student loans or save money toward a down payment on a home.

Of course, if your employer offers some type of health insurance coverage as part of your benefits package, you may be able to get affordable coverage without having to shop around for it.

No Mandatory Health Insurance: Disadvantages

It takes a very savvy health care consumer to score discounts from providers, not all of whom will necessarily go along with such requests. Normally, insurance companies, not individuals, are the ones negotiating with hospitals and doctors to lower prices for large member groups.

However, the main drawback when health insurance isn’t mandatory is the risk that you assume when choosing the self-pay route. The downside of going without health insurance could be substantial if you end up needing expensive medical care and you don’t have the money to pay for it from savings or your monthly income.

Even a minor health issue could result in a financial setback. According to UnitedHealth Group, the average cost of an emergency room visit to treat issues that could be handled at an urgent care or primary care facility was just over $2,000 in 2019.

That cost is 10 times higher compared to seeing an urgent care doctor and 12 times higher than primary care, but people who don’t have health insurance may assume the ER is their only option if they get sick or hurt. Additionally, illness and medical bills are known contributors to bankruptcy.

Options for Health Insurance Coverage

Before going without health insurance, Nicholson reviewed all of her options, which included being added to her husband’s plan and enrolling in a healthcare cost-sharing program. These are also things that you might consider if you’re without health insurance or thinking about canceling your plan since coverage is no longer mandatory.

You may consider short-term health insurance or catastrophic care policies, but these have their limitations in terms of what’s covered and who’s eligible. Applying for Medicaid may also be an option, but whether you qualify is dependent on your income and family size. Each state has different guidelines with regard to the income and asset thresholds allowed for eligibility for Medicaid coverage.

Is it Illegal to Go Without Health Insurance?

The federal government no longer requires individuals to have health insurance. However, a handful of states have instituted a health insurance coverage mandate, and most carry a penalty for not doing so. If you live in California, Massachusetts, New Jersey, Rhode Island, or Washington, D.C., you must have insurance or pay a penalty. Vermont’s mandate does not include a penalty for noncompliance.

Why Do I Need Health Insurance?

It’s important to have health insurance, even if you are young and in good health, because accidents and unexpected illnesses can have a serious impact on your finances. For example, a broken leg can cost you thousands of dollars, even if no surgery is needed. In addition, most health insurance plans give you access to preventive services—like shots or screening tests—for free.

How Many Americans Are Uninsured?

The number has fluctuated over the past few years, but the number of Americans without insurance has generally been trending lower since the enactment of the Affordable Care Act (ACA). Put simply, the ACA has made it much easier for uninsured Americans to obtain health insurance. In 2010, when the ACA was enacted, 48 million Americans were without health insurance. In 2022, that number had decreased to 30 million.

The Bottom Line

Not being required by federal law to have health insurance coverage doesn’t mean you don’t need it. If you don’t have health insurance, take time to research coverage options to determine which is the best fit for your healthcare needs and budget.

Is Health Insurance Mandatory? (2024)

FAQs

Is Health Insurance Mandatory? ›

The law requires you and your family to have Minimum Essential Coverage (MEC) throughout the year, qualify for an exemption, or remit an SRP when you file your New Jersey Income Tax return.

Is health insurance mandatory in the US? ›

Health insurance coverage is no longer mandatory at the federal level, as of Jan. 1, 2019. Some states still require you to have health insurance coverage to avoid a tax penalty.

Will the IRS penalize for no health insurance? ›

So technically, the law does still require most Americans to maintain health insurance coverage. But the IRS no longer imposes a penalty on people who don't comply with that requirement.

What is the New Jersey law on health insurance? ›

Under the New Jersey Health Insurance Market Preservation Act, New Jersey residents must have health insurance beginning January 1, 2019. People who don't have “minimum essential coverage” (MEC) may have to pay a penalty. This law is similar to the ACA individual mandate.

What happens if you don't have health insurance in the US? ›

If you don't have health insurance, you're at much greater risk of accumulating medical bills that you may not be able to pay. In a worst-case scenario, you could be sued and have your wages garnished. You might even be forced into bankruptcy.

What states is it illegal to not have health insurance? ›

Which states have an Individual Mandate?
  • California.
  • D.C.
  • Massachusetts.
  • New Jersey.
  • Rhode Island.
  • Vermont (but there's currently no financial penalty attached to the mandate)

Which US states require health insurance? ›

New Jersey, California, Rhode Island, Massachusetts, and the District of Columbia require their residents to have health insurance coverage or face penalties. Vermont recommends that residents have coverage, but there's no noncompliance penalty.

How much do I owe the IRS for not having health insurance? ›

The fee for not having health insurance (sometimes called the "Shared Responsibility Payment" or "mandate”) ended in 2018. This means you no longer pay a tax penalty for not having health coverage.

Is Obamacare still mandatory? ›

The individual mandate itself still exists (and qualifying for an exemption from the mandate still allows a person to buy a catastrophic health plan even if they're 30 or older). But there is no longer a federal penalty for non-compliance.

How does not having health insurance affect your tax return? ›

Penalty. You will have to pay a penalty, the Individual Shared Responsibility Penalty, when you file your state tax return if: You did not have health coverage. You were not eligible for an exemption from coverage for any month of the year.

Does NJ still penalize for no health insurance? ›

Under a new state law, residents of New Jersey must have health insurance beginning January 1, 2019, or pay a penalty. Horizon BCBSNJ offers different plans so that you can get the coverage you need and avoid paying a penalty.

Is it illegal to have no health insurance in New Jersey? ›

The New Jersey Health Insurance Market Preservation Act requires most state residents to maintain health coverage. You and your tax household must have minimum essential health coverage, qualify for an exemption, or remit a Shared Responsibility Payment when you file your New Jersey Income Tax return.

Is healthcare mandatory in New Jersey? ›

Under the New Jersey Health Insurance Market Preservation Act, New Jersey residents must have health insurance beginning January 1, 2019. People who don't have “minimum essential coverage” (MEC) may have to pay a penalty. This law is similar to the ACA individual mandate.

Why do people not have health insurance? ›

uninsurance has been attributed to a number of factors, including rising health care costs, the economic downturn, an erosion of employer-based insurance, and public program cutbacks. Developing effective strategies for reducing uninsurance requires understanding why people lack insurance coverage.

Can a patient choose not to use their insurance? ›

You may choose not to use insurance if the service you need isn't covered, or it's less expensive if you pay out of pocket. In most cases, providers and facilities must give you an estimate when you schedule care at least 3 business days in advance, or if you ask for one.

How many Americans don't have health insurance? ›

The Share of Americans without Health Insurance in 2022 Matched a Record Low. In 2022, 26 million people — or 7.9 percent of the population – were uninsured, according to a report in September 2023 from the Census Bureau.

Is there still a federal tax penalty for no health insurance? ›

In 2023, you are no longer required to pay a federal tax penalty for remaining uninsured. However, that may not apply to you if you live in a specific state. For those in California, you are still required to have health insurance and could be subject to a fee should you remain uninsured.

Does the IRS check if you had health insurance? ›

The Department of Health Care Services (DHCS) is required by state and federal law to send Form 1095-B information to the IRS and FTB for the purpose of validating months of health coverage reported by the person filing their state and/or federal taxes.

Can I file my taxes without proof of health insurance? ›

Health care coverage documents

You are not required to send the IRS information forms or other proof of health care coverage when filing your tax return. However, it's a good idea to keep these records on hand. This documentation includes: Form 1095 information forms.

What states still require you to have health insurance coverage to avoid a tax penalty? ›

Starting in 2020, California residents must either: Have qualifying health insurance coverage, or. Pay a penalty when filing a state tax return, or. Get an exemption from the requirement to have coverage.

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