Key takeaways
- The federal individual mandate penalty was eliminated at the end of 2018.
- There is a penalty in New Jersey, DC, Massachusetts, California, and Rhode Island.
- Vermont enacted a mandate that took effect in 2020, but there is no penalty for non-compliance.
- Maryland lawmakers also removed mandate penalty language from a 2019 bill before it passed.
Is there still a penalty for being uninsured?
In most states, there is no longer a penalty for being without health insurance. The ACA’s federal tax penalty for not having minimum essential coverage was eliminated after the end of 2018, under the terms of the Tax Cuts and Jobs Act of 2017. Technically, the coverage requirement is still in effect, but there’s no longer a federal penalty for non-compliance. However, some states have implemented their own health coverage requirements, with penalties for residents who don’t maintain coverage.
DC, Massachusetts, New Jersey, California, and Rhode Island have penalties for being uninsured
Although the IRS is not penalizing people who are uninsured in 2019 and beyond, states still have the option to do so. A handful of states have their own individual mandates and penalties for non-compliance:
- Massachusetts implemented an individual mandate and penalty in 2006, and it continues to be in effect (people who were uninsured in Massachusetts between 2014 and 2018 didn’t have to pay both the state and federal penalties, but now that there’s no federal penalty, the state’s penalty applies just like it did prior to 2014). The Massachusetts penalty only applies to adults, and the amount of the penalty is based on the person’s income and the cost of health plans available via the Massachusetts health insurance exchange (here are the details for Massachusetts penalty amounts for the 2023 tax year).
- The District of Columbia implemented an individual mandate and penalty that took effect in January 2019. The penalty amounts are based on the amounts that applied under the federal penalty in 2018 (a flat $695 per adult — half that for a child — or 2.5 % of income, whichever is higher), although the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in DC, as opposed to the average nationwide cost of a bronze plan.
- New Jersey also implemented an individual mandate and penalty that took effect in January 2019. The penalty amounts also mirror the previous federal penalty, but the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in New Jersey. Here are New Jersey’s calculators for determining the penalty amount for each year. The state is using penalty revenue to help fund its new reinsurance program.
- California enacted legislation in 2019 that created an individual mandate starting in 2020, with a penalty for non-compliance. California is using revenue from this program to offer additional state-funded health insurance subsidies.
- Rhode Island also implemented an individual mandate effective in 2020, with a penalty for non-compliance. The revenue generated from the penalty is used to help fund the state’s reinsurance program. Both the individual mandate and the reinsurance program were designed to have a stabilizing effect on Rhode Island’s individual/family market.
Vermont enacted a mandate but opted not to impose any penalty for non-compliance
Vermont enacted legislation in 2018 to create a state-based individual mandate, but they scheduled it to take effect in 2020, instead of 2019, as the penalty details weren’t included in the 2018 legislation and were left instead for lawmakers to work out during the 2019 session. However, the penalty language was ultimately stripped out of the 2019 legislation (H.524) and the version that passed did not include any penalty. So although Vermont does technically have an individual mandate, there is no penalty for non-compliance (ie, essentially the same thing that applies at the federal level).
Maryland also removed penalty language from 2019 legislation
Maryland enacted HB814/SB802 in 2019. The legislation initially included an individual mandate and penalty that would have taken effect in 2021. But that portion of the bill was removed before passage, despite support from insurers and the Maryland Hospital Association, and the final version did not include any of the original mandate penalty language. Instead, the new law created an “easy enrollment health insurance program” that uses tax return data to identify people who are uninsured and interested in obtaining health coverage, and then connect them with the Maryland health insurance exchange (more details here, in the fiscal note). Since then, several additional states have created similar “easy enrollment” programs, using the state tax return to connect uninsured people with health coverage.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
