The Fee For Not Having Health Insurance In 2023

There is no penalty for not having ACA mandated coverage in 2023 unless you live in a state like New Jersey or Massachusetts where it is mandated by the state. Because of this, short-term medical plans will be extremely popular in 2023 because they provide access to larger PPO networks at lower prices than ACA Bronze plans.

Why Does It Matter Whether People Have Health Insurance

The ACA’s individual mandate penalty was never popular, but rates would have been lower in 2019 if the individual mandate had not been eliminated. And that continues to be baked into the rates that insurers use in subsequent years.

Prior to 2014, there was no mandate, but insurance companies in most states could decline applications or charge additional premiums based on applicants’ medical history.

Once coverage became guaranteed-issue , it became necessary to impose some sort of measure to ensure that people maintain coverage year-round.

Otherwise, people would be more likely to go without coverage when they’re healthy, and only sign up for coverage when they’re in need of health care, which would result in higher premiums .

But as we’ve seen in the years since the individual mandate penalty was eliminated, enrollment in plans through the exchanges has remained quite steady, thanks to the ACA’s premium subsidies, combined with limited enrollment opportunities .

How Big Were The Penalties

The IRS reported that for tax filers subject to the penalty in 2014, the average penalty amount was around $210. That increased substantially for 2015, when the average penalty was around $470. The IRS published preliminary data showing penalty amounts on 2016 tax returns filed by March 2, 2017. At that point, 1.8 million returns had been filed that included a penalty, and the total penalty amount was $1.2 billion an average of about $667 per filer who owed a penalty.

Although the average penalties are in the hundreds of dollars, the ACAs individual mandate penalty is a progressive tax: if a family earning $500,000 decided not to join the rest of us in the insurance pool, they would have owed a penalty of more than $16,000 for 2018. But to be clear, the vast majority of very high-income families do have health insurance.

Today, the median net family income in the United States is roughly $56,500 For 2018, the penalty for a middle-income family of four earning $60,000 was $2,085 . This is far less than the penalty a more affluent family would have paid based on a percentage of their income.

The penalty could never exceed the national average cost for a bronze plan, though. The penalty caps are readjusted annually to reflect changes in the average cost of a bronze plan:

The maximum penalties rarely applied to very many people, since most wealthy households were already insured.

Also Check: Do I Need Health Insurance In Massachusetts

People Who Are Exempt From The Individual Mandate

There are only a few groups of people who are exempt and dont need to have qualifying health coverage:

• Anyone whose religion forbids them from having any health insurance

• Incarcerated individuals

• Members of Native American tribes

• Undocumented immigrants

• Individuals and families who dont need to file a tax return because their income is too low

• Anyone who would have to pay more than 8.05% of their income for insurance premiums

You may also qualify for an exemption if you suffered a personal or financial hardship over the previous year. You can learn more about getting an exemption through your marketplace. You may need to fill out and mail an application to the marketplace.

California Stockpiles Penalties From Uninsured Residents Instead Of Lowering Care Costs

By Angela HartNovember 10, 2022

We encourage organizations to republish our content, free of charge. Heres what we ask:

You must credit us as the original publisher, with a hyperlink to our californiahealthline.org site. If possible, please include the original author and California Healthline in the byline. Please preserve the hyperlinks in the story.

Its important to note, not everything on californiahealthline.org is available for republishing. If a story is labeled All Rights Reserved, we cannot grant permission to republish that item.

Don’t Miss: What Can I Expect To Pay For Health Insurance

No More Tax Penalties

In 2018, the ACA tax penalty was $695 for adults and $347.50 for children, or 2% of one’s annual income, whichever amount was more. However, on Dec. 22, 2017, when former President Donald J. Trump signed the Tax Cuts and Jobs Act, it repealed the ACA-related tax on Americans who refuse to purchase health insurance.

As of 2019, Americans without health insurance are not taxed by the government. However, individuals and families who choose to go without health insurance do so at their own risk.

Apply For An Insurance Exemption

There are some circumstances in which a person may be found exempt from having to pay a tax penalty. Some of these allowable exceptions include:

• If coverage is proven to be unaffordable.
• If a person has a short coverage gap, meaning that they are uninsured for less than three consecutive months during the year.
• If a persons income is lower than the state threshold for filing taxes, which usually means that they are not required to file taxes or pay penalties for not having health insurance coverage.
• If a person was incarcerated.
• If a person is a member of an Indian tribe.
• If a person experienced a general hardship, such as eviction, foreclosure, homelessness, unpaid medical bills, death of a close family member, or domestic violence.
• If a person is a member of a certain religious sect.

Read Also: How Does Health Insurance Through Employer Work

Do I Have To Have Health Insurance

When Vermonters file their state taxes, they must report if they had health insurance for each month of the year. There is no cash penalty for not having health insurance, but it is important that every Vermonter is covered. Health insurance can:

• Reduce the risk of large medical bills
• Help cover medications, visits to providers, and hospital care
• Help Vermonters stay healthy by paying for yearly check-ups, screenings and immunizations, and other preventive health care.

You can also visit the IRS website to learn more details:

How Much Was The Individual Mandate Penalty

The individual mandate is set as an annual penalty. If you went the whole year without qualifying health insurance, you have to pay the full penalty. The penalty amount is prorated if you went for only part of the year without coverage. For example, if your penalty was $700 and you went half of the year without coverage, you would owe half of the penalty, or $350.

The penalty amount for 2018 was either a per-person fee of $695 or 2.5% of your annual household income, depending which is higher.

If you pay the per-person fee, the maximum penalty is $2,085 per family. When paying as a percentage of income, the maximum penalty is equal to the national average annual premium of a Bronze plan sold through the Marketplace.

Any penalty you have to pay will be collected as part of your federal income tax return.

Don’t Miss: What Is The Cost Of Supplemental Health Insurance

What Happens If You Dont Have Health Insurance

BY Anna Porretta Updated on October 13, 2022

Many people are concerned that there is a penalty for no health insurance, which can be stressful. If you find yourself in this position, you might be wondering, what happens if you dont have health insurance?. If you have no medical insurance, do you have to pay a fine? While there is currently no tax penalty assessed at the federal level for not having health insurance, there are risks associated with being uninsured.

It is in most peoples best interest to have insurance that can help cover healthcare costs such as doctors visits, prescription drugs, and potential visits to the emergency room, however, its not always accessible to everyone. There are many different reasons why people might go without health insurance for a period, from the cost of coverage to changes in employment.

It is important to understand what you can expect if you go without health insurance, as well as your options for getting coverage no matter what your current situation might be. Keep reading or use the links below to learn more.

Assessment And Collection Of Penalties

For tax years between 2014 and 2018, if you qualify for health insurance and dont meet the exemption requirements, but still choose to remain without coverage, the IRS assessed penalties through your tax return. This fee was calculated as either a flat rate, or a percentage of your qualifying annual household income, whichever rate was higher.

Like any other tax, it was deducted from your refund or added to your balance due. However, unlike other outstanding taxes, the IRS was limited in the actions it can take to recover health insurance fees.

Don’t Miss: How Far Back Does Health Insurance Cover

Employer Mandate Penalty Amounts And Processes

Examples of employer penalties

The employer does not offer coverage to full-time employees.This example shows how the penalty would be calculated from the 2014 penalty amount of $2000 per full-time employee, excluding the first 30 employees.

Error loading table data.

The employer offers coverage that does not meet the minimum value and affordability requirements

The penalty is the lesser of the two results, as shown in this example.

Error loading table data.

What Are The Risks Of Being Uninsured

If you go without health insurance, there are several major risks that you take. For example, if you require medical care and you do not have health insurance, you need to pay for all of it out of pocket. This could be inordinately expensive, and there are some people who have to declare bankruptcy because of their medical bills. Of course, depending on where you live, you may also have to pay a penalty on your income tax. Because of these risks, you need to make sure you have the right insurance protection for yourself and your family. It would be our pleasure to help you with that.

You May Like: Do You Get Fined For No Health Insurance

How Much Can You Be Fined For Not Having Health Insurance

Are all individuals required to have health insurance? Will you receive a fine if you dont have a plan? This page provides an overview of health mandates across the country. Use it as a resource to understand when and where health insurance is required, plus the penalties you will potentially face if you fail to meet the criteria for coverage.

If you reside in a state where health insurance is required , be sure to choose a trustworthy insurance company that puts patients first. When you need to make use of healthcare services, the right provider will be able to offer you the proper coverage and access to healthcare services that you need to maintain both your physical and mental wellbeing.

• What Is the Individual Mandate?
• Is There a Penalty for Not Having Minimum Essential Coverage?
• State Health Insurance Mandates
• How Do I Avoid Paying a Mandate Penalty for Not Having Health Insurance?
• Exemptions From Individual Health Insurance Requirements

Do You Have To Get Health Insurance

Learn whether you must have health coverage under the Affordable Care Act in your state.

As we head into open enrollment for 2021 insurance plans, the Affordable Care Act is still the law of the land. And, technically speaking, the law still says that you must have health insurance. But and this is a big but the tax penalty for going without health insurance has been reduced to zero.

Read Also: Does Short Term Health Insurance Cover Pre Existing Conditions

Don’t Miss: Can I Take Myself Off My Parents Health Insurance

How Many Months Of Health Insurance Do I Need To Avoid A Tax Penalty

There is no longer a federal fine for not having health insurance. In states that require health insurance and have a penalty, including Massachusetts, California, New Jersey, and Rhode Island, the consensus is that you should have at least nine months of health insurance coverage throughout the year. If you lose coverage for one to two months, you will likely not be subject to any penalties, but you do have to make sure to document this gap for your taxes.

What Happens If You Need Medical Services But Dont Have Health Insurance

The Affordable Care Act made it easier for people to get health insurance, but many people still have no medical insurance. In this case, you might be required to pay for your health services out of pocket. If you go to a doctor for a routine physical and you dont have health insurance, you will be asked to pay for the visit out of pocket.

As a result, you might not be able to afford the cost of care. Even though you might be denied some medical services due to an inability to pay, you can still access emergency room care. If you have a medical emergency, you can still go to the emergency room and not be turned away.

Recommended Reading: What Is The Cost Of Catastrophic Health Insurance

What Is The Time Frame To Enroll

The open enrollment period for Obamacare plans is the time of the year when most people can sign up for a marketplace health insurance plan. These dates change every year, but tend to fall in the autumn for coverage starting in January. If you miss the open enrollment period you’ll have to wait another year to sign up, unless you qualify for a special enrollment period through a life event like losing a job, having a child, or getting married.

Most people can enroll at Healthcare.gov. But residents of 18 states will need to sign up through their state’s website. If you miss the deadline to enroll, you may face state fines if your state imposes them, so be sure to stay on top of your enrollment.

If you truly cannot afford health coverage, you may want to see if you qualify for Medicaid. You can apply for Medicaid at any time of year.

You can also enroll in independent health insurance throughout the year. An insurance agent can help you choose the best plan for you.

Health Insurance Penalty Options

Due to the fact that penalties were lower at first, some California residents may opted to simply pay the penalty and go without health insurance coverage, especially in the first couple of years. Another option some chose is to get cheap coverage and still pay the penalty. For example, if in tax year 2015 you were single, aged under 65, had a taxable income of $50,000, and you were uninsured the whole year, your penalty would be calculated as follows:

The greater of $395 or $50,000 income minus $10,150 Federal Minimum Threshold = $39,850 x 2% = $797 penalty. In this scenario, your tax penalty would be $797. If you remained uninsured in 2017, your penalty would go up to approximately $996 depending on the Cost of Living Adjustment and the Federal Minimum Threshold at that time. At $996 per year, that is still only about $83 per month. If you compare that penalty with paying a theoretical $375 a month for a Covered California plan, it may make sense to just pay the penalty for no health insurance.

* If you enrolled on your current plan before March 23, 2010 and have not changed coverage, then you may have grandfathered status. However, not all carriers in California are giving the option to maintain grandfathered status. Check with your insurance carrier to verify if your plan is on grandfathered status.

Recommended Reading: Can I Add My Husband To My Health Insurance

Individual Mandate Penalty Repeal

Former President Trump campaigned on a promise to repeal the ACA and replace it with something else. Republicans in the House passed the American Health Care Act in 2017 but the legislation failed in the Senate, despite repeated attempts by GOP Senators to pass it.

Ultimately, Republican lawmakers passed the Tax Cuts and Jobs Act and President Trump signed it into law in December 2017. Although the tax bill left the rest of the ACA intact, it repealed the individual mandate penalty, as of 2019 .

Although Congress did not repeal anything other than the mandate penalty , a lawsuit was soon filed by a group of GOP-led states, arguing that without the penalty, the mandate itself was unconstitutional.

They also argued that the mandate was not severable from the rest of the ACA, and so the entire ACA should be declared unconstitutional. A federal judge agreed with them in late 2018.

An appeals court panel agreed in late 2019 that the individual mandate is not constitutional, but sent the case back to the lower court for them to decide which provisions of the ACA should be overturned.

The case ultimately ended up at the Supreme Court, where the justices ruled in favor of the ACA. So although there is still no federal penalty for being uninsured, the rest of the ACA has been upheld by the Supreme Court .

Considerations For Modeling The Mandate

The literature, along with CBO and other analyses, suggests that peoples response to the removal of the individual mandate penalty depends on many factors: the value individuals place on being insured, out-of-pocket cost of insurance, the size of the mandate penalty, and nonfinancial considerations, such as a taste for compliance with the law. The following are key issues to account for when modeling the mandate.

Size of the penalty. Economic theory predicts that larger individual mandate penalties would lead to increased enrollment relative to smaller penalties. The evidence for this relationship is limited. While some studies find that compliance with the mandate increases with the size of the penalty,21 others have found no evidence that response to the mandate varies with size.22

Media coverage and political beliefs. Peoples willingness to comply with the mandate may be influenced by media coverage and political beliefs and may change over time.31 People also view the individual mandate more positively when they are informed that eliminating the mandate penalty may reduce insurance enrollment and increase premiums.32

Recommended Reading: How To Get Appointed To Sell Health Insurance