Trying to figure out if you need health insurance can get confusing fast. It really depends on your state.
At the federal level, there’s no law forcing you to have health insurance and no penalty if you go without coverage. Still, some states have their own health insurance requirements and will fine you if you don’t have it.
Right now, only five states and Washington D.C. have individual health insurance mandates with penalties. California, Massachusetts, New Jersey, Rhode Island, and the District of Columbia can fine you for not having qualifying coverage.
Vermont requires health insurance but doesn’t actually give you a financial penalty if you skip it. Every other state lets you go without insurance and won’t punish you for it.
The rules shift a lot based on where you live. Penalties can be hefty depending on your income and family size.
Key Takeaways
- Federal law doesn’t require health insurance, but five states and Washington D.C. do penalize you for being uninsured
- Skipping coverage can mean big financial risks from medical bills and possibly state tax penalties
- Plenty of ways exist to get affordable coverage, like marketplace plans and assistance programs
Federal Laws on Mandatory Health Insurance
The Affordable Care Act set up rules about health insurance, but those rules changed. Federal law doesn’t require you to have health insurance anymore as of 2019.
The Affordable Care Act and the Individual Mandate
The Affordable Care Act became law in 2010. It included an individual mandate that said most Americans had to get health insurance.
The law required qualifying health coverage. If you didn’t have it, you paid a tax penalty when you filed your taxes.
Some people got exceptions. You could avoid the penalty if you:
- Had financial hardship
- Were part of certain religious groups
- Had very low income
- Qualified under other special situations
The individual mandate tried to encourage more people to buy insurance. The idea was to spread risk and keep costs down for everyone.
Repeal of the Federal Tax Penalty
Congress made changes to the individual mandate in 2017. The federal tax penalty for not having health insurance disappeared starting in 2019.
The Tax Cuts and Jobs Act set the penalty at zero dollars. Now, you don’t pay any federal penalty for being uninsured.
The individual mandate technically still exists. But without a penalty, it doesn’t do anything for most people.
You can choose not to have health insurance. The government won’t fine you or take legal action if you skip coverage.
Impact of the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act changed health insurance rules but kept most of the ACA in place. Health insurance coverage isn’t mandatory at the federal level as of January 1, 2019.
Here’s what that means:
- No federal penalties for not having insurance
- States can create their own mandates
- You get to decide if you want coverage
Some states set up their own individual mandates. These states can still charge you a penalty on your state taxes if you don’t have insurance.
You can still get subsidies to help pay for insurance. Insurance companies must still cover pre-existing conditions.
State-Level Requirements and Penalties
Five states and Washington D.C. still enforce their own health insurance requirements with tax penalties if you skip coverage. Penalty amounts jump around depending on your state, income, and family size.
States With Active Individual Mandates
California, Massachusetts, New Jersey, Rhode Island, and Washington D.C. keep individual mandates with financial penalties. Vermont has a mandate but doesn’t penalize you.
California: The greater of $900 per adult and $450 per child, or 2.5 percent of your household income above the state filing threshold.
Massachusetts: Sliding scale based on income, age, and family size. The penalty can’t go over half the cost of the lowest-priced ConnectorCare plan.
New Jersey: Penalties depend on income and household size. The max penalty equals the cost of a bronze-level plan in the state marketplace.
Rhode Island: The greater of $695 per adult and $347.50 per child, or 2.5 percent of your annual household income above the state filing threshold.
Washington D.C.: The greater of $745 per adult and $372.50 per child, or 2.5 percent of household income above the district filing threshold.
State Tax Penalty Calculations
Your state decides how to calculate the penalty when you file your taxes. Most use a formula that compares a flat dollar amount to a percentage of your income.
The penalty applies each month you go without qualifying health insurance. If you’re uninsured for just part of the year, the penalty gets prorated.
Your age, household size, and annual income all play a role in the penalty amount. States usually cap penalties at the cost of their lowest-cost bronze plan or something similar.
Some states don’t penalize people earning below a certain income. For instance, Massachusetts exempts people with incomes under 150 percent of the Federal Poverty Level.
Exemptions and Qualifying Life Events
You might qualify for exemptions from state penalties if coverage is unaffordable, you have a hardship, or for religious reasons. States offer similar exemption categories but the process to get them can be different.
Affordability exemptions kick in if the cheapest plan costs more than a certain percentage of your income. Each state sets its own limit.
Hardship exemptions are for things like homelessness, domestic violence, or big unexpected expenses. Usually, you have to apply for these through your state’s insurance marketplace.
Short gaps in coverage (three months or less) often don’t count against you. The details change from state to state.
Some major life events let you get coverage outside the usual enrollment periods. Qualifying events include job loss, marriage, divorce, or having a baby.
Consequences of Going Without Medical Insurance
Without health insurance, you’re at risk for huge medical bills and might have trouble getting routine care. Skipping health insurance can hit both your finances and your health.
Medical Debt and Financial Risk
No insurance means you pay the full cost of every medical service. Insured patients get lower, negotiated rates, but you’re stuck with the sticker price.
Even a minor issue can cost a fortune. A quick emergency room trip can run thousands. Surgery or a longer hospital stay? That can mean bills in the tens or hundreds of thousands.
Common medical costs without insurance:
- Emergency room visit: $1,500 to $3,000
- Ambulance ride: $400 to $1,200
- Basic surgery: $10,000 to $50,000
- Hospital stay (per day): $2,000 to $5,000
Medical debt is a leading cause of bankruptcy in the US. You’re personally on the hook for medical bills, and if you can’t pay, collections agencies might come calling.
Some hospitals offer payment plans, but you still owe the whole amount. A few might give discounts for uninsured patients, but don’t count on it.
Access to Health Care Without Insurance
You can still get medical care without insurance, but it’s tougher. Hospitals have to treat you in emergencies, but only if it’s a real emergency.
Emergency care requirements:
- Hospitals must treat you in emergencies
- They can’t turn you away if you can’t pay
- They treat you until you’re stable
For non-emergencies, things get trickier. Many doctors want payment upfront or proof of insurance. Specialists are often even stricter.
Community health centers and free clinics can help. They provide care but usually have long waits and limited services.
Some providers offer cash discounts, but you’ll have to ask and negotiate. Without insurance, you’ll probably pay more.
Risks of Delaying or Forgoing Care
A lot of people skip or delay care because of the cost. That’s risky. Minor health problems can turn into big ones if you don’t catch them early.
Preventive care is tough to get without insurance. Regular check-ups, screenings, and vaccines help find problems when they’re easier to fix.
If you skip preventive care, small issues can turn serious. High blood pressure can become heart disease. Unmanaged diabetes can cause major complications.
Mental health services are pricey without insurance. Many people just go without, which can hurt their well-being and ability to work.
Prescription drugs cost more, too. Some people skip doses or never fill prescriptions because of the price, and that can make things worse.
The stress of being uninsured isn’t great either. Worrying about bills or avoiding care adds to mental and physical strain.
Alternatives and Assistance Options for the Uninsured
If you don’t have health insurance, you’ve still got options. Hospitals offer charity care, government programs exist, and short-term coverage can help in a pinch.
Charity Care and Nonprofit Hospitals
Many hospitals have charity care programs for uninsured patients. Sometimes it’s called financial assistance.
Eligibility Requirements:
- Low income
- Few assets
- Proof of financial hardship
Nonprofit hospitals have to offer charity care to keep their tax-exempt status. Some give free care, others just reduce your bill.
You can apply for charity care before or after you get treatment. The hospital billing office can help you with the paperwork.
Community health clinics use sliding fee scales based on income. They offer basic care at lower costs or sometimes even free.
Financial Assistance Programs
Government programs help people who qualify. Medicaid covers low-income adults and families in most states.
You might get Medicaid if your income is below these limits:
- Single: Around $20,000 a year
- Family of four: Around $41,000 a year
The ACA marketplace gives subsidies to help pay for insurance. If your income is between 100 percent and 400 percent of the federal poverty level, you might get help.
Other options include:
- State-funded insurance
- Local health department clinics
- Free clinics in your area
Apply through Healthcare.gov or your state’s marketplace. Open enrollment is the main window, but you can also sign up after big life changes like losing a job.
Short-Term and Catastrophic Coverage
Short-term health insurance provides temporary coverage for gaps between regular insurance plans. These plans cost less than full health insurance but offer limited benefits.
Short-term plans usually pay for emergency room visits and some doctor visits. They also include basic hospital care.
Important limitations:
- No coverage for pre-existing conditions
- Limited prescription drug coverage
- No preventive care benefits
Catastrophic health insurance covers major medical expenses for people under 30 or those with financial hardship exemptions. These plans have low monthly payments but high deductibles.
You pay most medical costs until you hit the deductible. After that, the insurance steps in for essential health benefits.
Catastrophic plans include three primary care visits per year before you meet the deductible.
How to Obtain Health Insurance Coverage
You have a few main ways to get health insurance. Your best option depends on your situation and timing.
The ACA marketplace offers subsidized plans during certain enrollment windows. Medicare serves people 65 and older.
Open Enrollment Periods
Open enrollment happens once a year for most health insurance plans. This is when you can sign up for new coverage or change your existing plan.
ACA Marketplace Open Enrollment:
- Runs from November 1 to January 15 each year
- Coverage starts January 1 if you enroll by December 15
- Enroll later and your coverage starts the next month
Employer Plan Enrollment:
- Usually occurs in fall months
- Exact dates depend on the company
- You typically get 30 days to make your choices
If you miss open enrollment, you usually have to wait until the next year. The only way around this is to qualify for a special enrollment period.
Special Enrollment Periods and Qualifying Events
Life changes can open a special enrollment opportunity outside regular enrollment times. You get 60 days from the qualifying event to enroll.
Major Qualifying Events:
- Getting married or divorced
- Having a baby or adopting a child
- Losing job-based coverage
- Moving to a new state or county
Income Changes:
- Becoming eligible for premium tax credits
- Losing Medicaid or CHIP coverage
- Income dropping below 100% of poverty level
You need to show proof of your qualifying event. Marriage certificates or job termination letters work as evidence.
ACA Marketplace and Subsidies
The ACA marketplace lets you compare plans and check if you can get financial help. Most people qualify for some kind of premium assistance.
Premium Tax Credits:
- For incomes between 100 and 400 percent of poverty level
- Applied directly to your monthly premium
- Lowers your out-of-pocket costs
Cost-Sharing Reductions:
- Lower deductibles and copays
- Only available with Silver-level plans
- For incomes up to 250 percent of poverty level
Plan Categories:
- Bronze: Lowest premiums, highest deductibles
- Silver: Middle ground, most people pick this
- Gold: Higher premiums, lower out-of-pocket costs
- Platinum: Highest premiums, lowest deductibles
Apply at HealthCare.gov or your state’s marketplace site.
Medicare Eligibility
Medicare covers people 65 and older. You can also qualify if you have certain disabilities or kidney disease.
Automatic Enrollment:
- Happens if you already get Social Security
- Medicare Part A and B coverage begins
- Your Medicare card comes in the mail
Manual Enrollment:
- Sign up three months before you turn 65
- Visit the Social Security Administration website
- This helps you avoid late enrollment penalties
Medicare Parts:
- Part A: Hospital coverage, usually premium-free
- Part B: Doctor visits, monthly premium required
- Part C: Medicare Advantage plans from private companies
- Part D: Prescription drug coverage
Late enrollment can mean permanent premium increases. The penalty is 10 percent of Part B premiums for each year you wait.
Cost Considerations and Premiums
The price of health insurance varies a lot based on your personal details and where you live. Without insurance, you pay the full cost of care and risk medical debt.
How Premiums Are Determined
Your age affects your premium. Older adults pay more because they use more medical services.
Where you live also matters. States with fewer insurance companies or higher healthcare costs charge higher premiums.
Your income can lower your monthly cost if you qualify for subsidies. People who qualify can reduce monthly costs significantly through marketplace subsidies.
The plan you pick changes your premium. Bronze plans cost less each month but have higher deductibles. Platinum plans cost more but cover more expenses.
Family size increases the total premium. Adding each family member bumps up the price.
Current law says pre-existing conditions can’t raise your premium. Insurance companies charge the same rates no matter your health.
Financial Impact of Being Uninsured
Without insurance to subsidize your cost of care, you will need to pay more for the same healthcare services others get at lower costs.
Hospital bills can pile up fast. A simple emergency room visit might cost $3,000 or more if you don’t have coverage.
Medical debt becomes a real risk. Many people struggle financially when unexpected health issues pop up without insurance.
You won’t be denied care if you don’t have health insurance, but you will likely get stuck paying the whole bill. Hospitals must treat emergency patients, but you get the bill.
Prescription medications cost much more without insurance. Monthly meds can run hundreds of dollars at full price.
Preventive care gets expensive too. Regular checkups and screenings that insurance would cover might get skipped because of cost.
Frequently Asked Questions
State laws on health insurance requirements are all over the place. Some states have tax penalties, others don’t care if you have coverage.
What are the penalties for being uninsured in states that require health insurance?
You face tax penalties in states that require health insurance coverage. New Jersey, California, Rhode Island, Massachusetts, and the District of Columbia require their residents to have health insurance coverage or face penalties.
The penalty amount changes depending on your state and income. You pay these penalties when you file your state tax return.
Vermont requires health insurance but doesn’t charge a penalty. So you won’t face financial consequences for being uninsured there.
Are there specific states with mandates on individual health insurance coverage?
Yes, presently there are six states with individual mandates: California, D.C., Massachusetts, New Jersey, Rhode Island, and Vermont. Vermont currently has no financial penalty for not having coverage.
These states created their own rules after the federal mandate penalty ended. If you live in these places, you need qualifying health insurance.
All other states don’t require you to have health insurance. You can go without coverage in those states without legal trouble.
What are the implications of not having health insurance in states such as Colorado or Ohio?
Colorado and Ohio don’t require health insurance. You won’t get legal penalties or fines for being uninsured.
Still, you risk big medical bills if you need care. Uninsured individuals often face unaffordable medical bills when they do seek care.
You might qualify for charity care or reduced fees at hospitals. Hospitals that accept federal money must provide a certain amount of free or reduced fee care.
How does the absence of health insurance impact residents in Illinois?
Illinois doesn’t require health insurance. You won’t pay state penalties if you’re uninsured.
You can get free or low-cost coverage through Medicaid if you qualify. Illinois offers state health coverage programs for eligible residents, even if you’re not a citizen.
Without insurance, you face the same financial risks as people in other non-mandate states. Emergency rooms must treat you, but you’ll get the bill for your care.
What are the legal requirements for health insurance coverage in Indiana?
Indiana has no legal requirement for health insurance. The state doesn’t fine you for being uninsured.
You can skip health insurance in Indiana and not break any laws. But you’re still financially responsible for any medical bills you rack up.
Indiana expanded Medicaid, so you might qualify for free or low-cost coverage. It’s worth checking your eligibility for these programs, even if you don’t have to get insurance.
What consequences do California residents face for not maintaining health insurance?
California says you need health insurance or you’ll pay a tax penalty. You have to report your coverage when you file your California state tax return.
The penalty depends on your household income and size. California figures out the penalty as a percentage of your income or a flat dollar amount, whichever costs more.
You might get an exemption if you’re dealing with financial hardship or some other tough situation. The state offers programs like Medi-Cal for people with low incomes and subsidized plans through Covered California.
