What is the Punishment for Not Having Health Insurance

What is The Punishment for Not Having Health Insurance?

There is zero federal punishment for not having health insurance since 2019, however, most states and jurisdictions have enacted their own health insurance mandates. This means a requirement to have health insurance coverage

The federal tax punishment for not having health insurance was abolished in 2019 because of changes made by the President Trump Administration.

The estimated cost for a tax penalty for not having health insurance in 2018 was $850 for adults and $425 for children or 2% of your yearly income, while a family of four that goes uninsured for the period of one year will face a punishment of paying at least $2,550, whichever amount is more.

This penalty was planned to protect both people from showing nonchalant attitudes toward health insurance and not being able to pay off their medical expenses in the event of injury or illness.

During this period the affordable care act (ACA) had an individual compulsory mandate, meaning all Americans had to have health insurance or pay a tax penalty if they so desire not to have one. “Individual mandate”, which means a legal requirement to have health insurance.

However, the Republican lawmakers kicked against the individual mandate, singlehandedly challenging it in court. Ultimately, the Supreme Court asserted 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However, after the election of President Donald Trump, the GOP-led Congress passed the Tax Cuts and Jobs Act, which repealed the individual mandate. President Trump then signed the bill into law. Under the new law, the individual mandate was not longer in effect since 2019.

Health Insurance Penalty Exemptions

The affordability exemption is the main exemption from the state-level individual mandate. If the least expensive plan premium is greater than or around 8% of your household income in 2021, there is no tax penalty for being uninsured. This implies that the punishment to be faced is a determinant of one’s income level.

Let us look at the following exemptions:

i. Low income (below 135-150% of the federal poverty level)

ii. Religious conscience exemption

iii. Hardship exemption: homelessness, eviction, natural disaster, domestic violence, bankruptcy, or other disrupting life events are always put into consideration

iv. Short coverage gap (three months or less)

v. Part of a federally recognized Native American tribe

States that have Individual Mandate?

Below are the states with individual mandates:

a. California

b. D.C.

c. Massachusetts

d. New Jersey

e. Rhode Island

f. Vermont ( it has instituted a health insurance penalty for uninsured individuals in that state. The health insurance penalty law went into effect in 2020)

g. District of Columbia. This city has signed its own health insurance penalty into law. It went into effect in 2019.

How Do I Avoid the punishment for not Paying a Mandate Penalty for Not Having Health Insurance?

Individual mandates from some states make it possible to incur a penalty via reduced state tax credits. Ensure you are fully covered for the entire year by understanding the different enrollment periods.

Also, you may enroll in a private insurance marketplace through your state’s marketplace. However, The amount you make each year must meet certain rules. The good news is that some financial support may be available even if you are in a middle-income range.

For instance, you’ll likely be able to get money if you make up to about $54,000 a year for one person or about $111,000 for a family of four. These income amounts are based on the federal poverty guidelines and will change every year. How much financial help you get depends on how much money you make a year. The less you make, the more help you get.

Procedure for enrolling in Health insurance

Whether you reside in a state with an individual mandate or not, you can get the coverage you need during “Open Enrollment” which is a part of the year in which you may enroll in or change your healthcare plan. For 2021, the Open Enrollment Period is from Monday, November 1, 2021, to Saturday, January 15, 2022.

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 knowing you are getting the care that meets certain standards. And this is in terms of both levels of coverage and consumer protection.

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 level, 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. Ensure you put into consideration all the possible healthcare plans and enroll in one by the end of the Open Enrollment period to ensure coverage for the following year and avoid punishment.

Finally

In most states, there’s zero punishment or penalty for not having health insurance coverage. This was a result of the abolishment of the individual mandate in 2019 by President Trump’s administration. However, some states have enacted their own individual mandates stating.

If you live in one of these states and you do not have an exemption, you may be forced to pay a fine, usually in the form of a tax penalty.

If you live in a state where health insurance is required but do not wish to enroll in a plan, see if you are eligible for an exemption so that you can avoid the tax penalty. Some of those states include California, New Jersey, D.C, Rhode Island e.t.c. In present-day insurance, the punishment for not having health insurance has been eliminated while it’s still effective in most states as well.