The Affordable Care Act’s individual mandate, a provision that required all Americans to have health insurance or pay a tax penalty, was repealed in December 2017. While the individual mandate is no longer in effect, you may still owe a fee, depending on your state of residence.1
When Did the Individual Mandate Repeal Take Effect?1
The Affordable Care Act (ACA) individual mandate repeal took effect in 2019. The penalty for not having health insurance was enforced through 2018. Consumers who dropped coverage before January 2019 still had to pay the fine on their 2018 income tax returns. The penalty for not having insurance in 2018 was 2.5% of a person’s yearly household income or $695, whichever was greater.
What Does the Individual Mandate Repeal Mean?
The individual mandate repeal means that the tax penalty for not having health insurance is now dependent entirely on your state of residence. For example, if you live in California, you may still have to pay a penalty.
Did This Repeal the Affordable Care Act?
No, the Affordable Care Act (ACA) has not been repealed. The following components of the law are still in place:
- Consumers can still purchase insurance coverage on state and federal marketplaces.
- Medicaid expansion is maintained.
- Government subsidies and consumer protections are still issued.
Will I Be Penalized for No Health Insurance in 2021?
You will only be penalized for not having health insurance in 2021 if you reside in a state that has enacted its own tax penalty laws. Check the list below to see if your state has an individual mandate.
Which States Have Individual Mandates?
Currently, the District of Columbia and five states (California, Massachusetts, New Jersey, Rhode Island, and Vermont) have individual mandates for the 2020 tax year. Some states and regions have created strategies to preserve the individual mandate that residents have health coverage or face a tax penalty. Here’s where those states currently stand:
|California||As of 2020, California residents must have health insurance or pay a penalty when filing state taxes. It’s possible to get an exemption from the coverage requirements.2|
|Washington, D.C.||As of 2019, D.C. residents are required to have health insurance, get a coverage exemption, or pay a penalty on their D.C. taxes. The fee is $695 for each adult or 2.5% of family income over the federal filing threshold, whichever is greater.3|
|Massachusetts||Massachusetts has an individual mandate in place. If you don’t have health insurance, you may have to pay a tax penalty.|
|New Jersey||New Jersey residents are required to have health coverage, qualify for an exemption, or pay a “shared responsibility payment” on their state taxes.|
|Rhode Island||As of January 2020, Rhode Islanders must have health insurance under the state’s individual mandate. Failure to have qualifying coverage could result in a tax penalty.4|
|Vermont||Vermont does not have a cash penalty for residents without health insurance coverage. However, Vermont residents are required to report whether they had health coverage for each month of the year when filing their state taxes.|
To keep up with the latest information on healthcare news, check out HealthMarkets’ healthcare reform update page.
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