Which states will charge you a penalty if you don’t have health insurance?
One of the key components of the original version of the Affordable Care Act (ACA) was the “individual mandate.” In the world of health insurance, that means a requirement to have health coverage. The ACA had an individual mandate, meaning all Americans had to have health insurance or pay a tax penalty.
But Republican lawmakers opposed the individual mandate, ultimately challenging it in court. Ultimately, the Supreme Court ruled that the mandate was in fact constitutional. However, after the election of President Donald Trump, the GOP-led Congress passed the Tax Cuts and Jobs Act, which eliminated the individual mandate. President Trump then signed the bill into law. Under the new law, the individual mandate was no longer in effect as of January 1, 2019.
However, a number of states have their own version of the individual mandate. And this means that in those places, you still must have health insurance or pay a health insurance penalty on your income tax return for the tax year you did not have minimum essential coverage. Grab our step-by-step guide to enrolling in Marketplace coverage (aka Obamacare or Affordable Care Act insurance) to learn more.
Which states have an Individual Mandate?
Presently there are six states with individual mandates:
- New Jersey
- Rhode Island
- Vermont (but there’s currently no financial penalty attached to the mandate)
If you live in one of the above states, this means you must have health insurance coverage. If you don’t, you may have to pay a fine to the state.
Why have an Individual Mandate?
These states have an individual mandate for the same reason the ACA originally did. Without an individual mandate, people would only buy insurance if they knew they were going to need it. Most often, this means the elderly and people with pre-existing conditions.
But those who use their health insurance the most are also the most expensive to insure. Before the Affordable Care Act, insurance companies would evaluate all applicants before enrolling them. Based on people’s age and medical history, the insurance companies would then deny them health care coverage, or charge them more for it. But the ACA made that kind of discrimination illegal. And then it took things one step further. An individual mandate is an incentive for everyone to get health insurance, even healthy people. That meant there was now a larger pool of people applying for health insurance. And with more healthy people getting health insurance, health insurance companies could lower premiums for everyone.
In other words, the individual mandate was meant to be one of the of cost-savings and consumer protections we associate with the ACA. It allows more people to be insured at a lesser rate per person. Even though there is no national individual mandate anymore, some states have passed their own mandates to help keep more people insured at lower costs per person. If the mandates help more people get insured, taxpayers in these states will have lower monthly premiums on average.
How to get enrolled
Whether you live in a state with an individual mandate or not, you can get the coverage you need during Open Enrollment. The annual Open Enrollment Period (OEP) is the time when all eligible Americans can shop the Health Insurance Marketplace. There, you can pick an Affordable Care Act-compliant health plan for 2020. Getting an Obamacare health insurance plan means knows you are getting care that meets certain standards. And this is in terms of both level of coverage and consumer protections. Also, when you shop the Marketplace for health insurance, you’ll also see what kinds of subsidies you qualify for to make that coverage more affordable. These subsidies are based on household income, and they can be very significant—people who enroll on HealthSherpa pay an average of $47/month, and 94% of people qualified for subsidies during 2020’s Open Enrollment. You can also see if you qualify for Medicaid or Medicare on HealthSherpa.