Is Health Insurance Required in Your State? | eHealth

If you’re looking to move to a new state and looking for individual or family health insurance options, you may have questions about which states require health insurance. While health insurance is no longer required at the federal level, there is a chance you could face a tax penalty for not having adequate coverage if you live in a state that has an individual mandate.

Currently, there are five states and one district where health insurance is required. You may be subject to a tax penalty if you live in one of the following areas and do not have health insurance coverage:

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• massachusetts
• new jersey
• vermont
• california
• rhode island
• district of columbia (washington dc)

It’s crucial to take a closer look at affordable health insurance in these states if you want to avoid paying a penalty on your income tax but are having trouble affording health insurance. If you earn less than 400% of the federal poverty level, you may be eligible for advanced premium tax credits or other subsidies that will lower your health insurance premiums. no matter what state you live in or where you want to move, ehealth is here to answer all of your health insurance questions and concerns. Learn more about health insurance requirements and state rules to avoid penalties and find the right plan to meet your needs.

what is the individual mandate?

The uninsured rate in the United States approached an all-time low in early 2022, with only 8% of people without health insurance. a new report from the us The Department of Health and Human Services further confirms that with the Affordable Care Act (ACA) established health insurance marketplaces, a record 35 million now have ACA-related coverage.

The national uninsured rate is at an all-time low

Prior to 2020, if you didn’t have compliant health insurance for more than two consecutive months, you’d pay a penalty. this requirement was commonly known as the obamacare individual mandate. the purpose of the penalty was to encourage everyone to purchase health insurance if they were not covered by their employment or a government-sponsored program. According to Kaiser Health News, the federal penalty here for not having health insurance in 2018 was $695 per uninsured adult or 2.5% of your income, whichever was greater.

In response to concerns about the affordability of ACA plans from the marketplace, Congress passed the Tax Cuts and Jobs Act (TCJA) in late 2017. The act reduced the individual penalty from Obamacare’s individual mandate to zero. dollars, as of 2019 now that the individual mandated tax penalty has been removed, there is no tax penalty at the federal level.

Which states require health insurance and why?

In addition to Washington D.C., there are five states that require health insurance. After Obamacare’s individual mandate was repealed, there were several states that decided to require people to have health insurance on their own. These include New Jersey, Vermont, California, Rhode Island, and Massachusetts.



states and districts that require health insurance

The goal of requiring health insurance is to prevent people from only buying health care plans if they know they will need them. in case of an emergency, they would have to pay a large sum out of pocket for care if they are uninsured. Requiring health insurance also essentially prevents health insurance companies from denying coverage to those who need it most. companies cannot discriminate against or deny coverage to older people or people who have pre-existing health problems. They also can’t charge you more even though it costs more to insure.

In states that require health insurance, the average monthly premium is lower for taxpayers since more people are insured. In general, the individual mandate is intended to protect consumers.

california individual mandate

• effective date: January 1, 2020
• requires health insurance that complies with here
• tax penalty for Californians who can afford insurance but don’t have it
• provides state subsidies to low-income residents

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In 2021, the annual penalty for uninsured Californians is 2.5% of household income or at least $750 per adult and $375 per dependent under 18, whichever is greater. dollar figures will increase each year with inflation. The penalty is capped at the state average premium for a California Stock Exchange bronze level plan for the applicable household size and is waived if that premium exceeds 8.3% of household income.

You may be eligible for an exemption in some situations, such as:

• Religious Conscience Exemption: If you or someone in your family is part of a recognized religion that is against private insurance or believes exclusively in spiritual healing, you may qualify for a religious conscientious exemption .
• hardship waiver: experienced certain hardships that prevented you from getting health coverage, such as homelessness, eviction, natural disaster, domestic violence, bankruptcy, etc.
• Affordability Exemption: The tax penalty does not apply if the lowest plan premium available to you is more than 8.27% of your household income in 2021.
• short gap in coverage: went without coverage for three consecutive months or less
• part of a federally recognized Native American nation

According to data from the state exchange, covered california, the restoration of the individual mandate helped reduce premiums by an average of 3.2% in 2020. covered california anticipates this could save Californians an average of $167 per year in your health insurance premiums in 2020 in addition, penalties resulting from the california individual mandate will be used to fund a three-year program to provide state subsidies that help low- and middle-income households purchase health coverage through the state exchange .

massachusetts individual mandate

• Effective Date: January 1, 2006
• requires health insurance that complies with here
• tax penalty for massachusetts who can afford insurance but don’t have it
• provides state subsidies to low-income residents

massachusetts has one of the highest levels of insurance coverage in the united states; 97.5% of residents have health insurance, in part due to an insurance mandate. the massachusetts individual mandate predates the affordable care act and the obamacare individual mandate. It was a blueprint for the individual obamacare mandate. penalty amount varies based on income, age, and family size, up to 50% of the minimum monthly premium payment for which the person would have qualified through health connector, the massachusetts health insurance exchange .

According to mass.gov, this is how the massachusetts tax penalty works:

• if you are a resident of massachusetts and do not have insurance because you cannot afford the available plans, you will not be penalized. You also won’t be penalized if your income is at or below 150% of the federal poverty level.
• If you owe a tax penalty, the amount varies based on income, age, and family size.
• The tax penalty cannot be more than 50% of the least expensive plan premium for which you would have qualified through Health Connector, the Massachusetts health insurance exchange.

individual new jersey mandate

• effective date: January 1, 2019
• requires health insurance that complies with here
• tax penalty for New Jerseyans who can afford insurance but don’t have it
• provides state subsidies to income residents

the new jersey penalty, also known as the shared responsibility payment, is based on household income (which includes income from dependents) as well as family size. however, the penalty is capped at the cost of the average state premium for bronze health insurance plans.

According to nj.gov, the minimum tax penalty for individuals is $695 and the maximum is $3,012 for tax year 2020. For a family of five with a household income of $200,000 or less, the minimum tax penalty in 2020 is of $2,351 and the maximum is $5,074. If you are not required to file a 2020 New Jersey tax return, then you are exempt from paying this penalty.

new jersey law has exceptions in certain situations. For example, if you can’t afford health plans available through the Marketplace or from your employer, you may be eligible for an exemption. plan premiums must be more than 8.05% of your household income for that year. There may also be exemptions for religious beliefs or hardship.

washington dc individual mandate

• effective date: January 1, 2019
• requires health insurance that complies with here
• tax penalty for residents who can afford insurance but don’t have it
• provides exemptions from the tax penalty for circumstances such as financial hardship, pregnancy, or eviction

People who go a full year without qualifying health coverage and don’t apply for an exemption may have to pay a tax penalty. penalty amount is 2.5% of gross family income or $695 per individual and $347.50 per child; will pay whichever amount is greater.

According to DCHealthLink.com, the maximum penalty for not having coverage in DC (“Penalty Cap”) is based on the average premiums of bronze-level health plans available on DC Health Link. in 2020, this amount is $3,448/year per person and, for households with more than one person without coverage, is multiplied by the number of people in the household without coverage up to a maximum of five household members. So potentially, a household of five or more people who went without health coverage all year would have a penalty cap of $17,240 in 2020.

rhode island individual mandate

• effective date: January 1, 2020
• requires health insurance that complies with here
• tax penalty for rhode islanders who can afford insurance but don’t have it
• provides state subsidies to help low-income residents

The penalty for not having compliant health insurance here is the same as it would have been under the federal individual mandate. it will cost a family $695 for each uninsured adult and $347.50 for each uninsured child or 2.5% of household income, whichever is greater. penalties also increase annually with inflation. however, the maximum a household can be penalized cannot be more than the total annual premium for an average bronze plan in rhode island.

rhode island allows exemptions in certain situations. And, effective December 31, 2020, Rhode Island expanded its eligibility criteria to include a COVID hardship waiver. this new waiver recognized the impact the pandemic may have had on residents’ ability to pay for and obtain health insurance. If you live in Rhode Island, you may be eligible to file for a hardship waiver if, as a result of the COVID pandemic:

• lost minimum essential coverage in 2020, or
• experienced a hardship that prevented you from obtaining minimum essential coverage in 2020

vermont individual mandate

• effective date: January 1, 2020
• Residents must self-report whether or not they have CA-compliant insurance during tax year 2020 on their 2020 tax forms
• There is no penalty for not having compliant health coverage here in 2020

vermont requires residents to report if they have health insurance when they file their state income tax returns. this may include medicaid or medicare insurance. however, unlike other states with individual mandate laws, you are not penalized if you do not have minimum essential health coverage.

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Although Vermont does not financially penalize residents who fail to comply with the state’s individual health insurance mandate, this does not mean that there will not be a penalty in the future. If you live in Vermont, be aware that lawmakers may develop and implement a penalty for those who should have health coverage that complies with this and do not.

how do I avoid the individual mandate tax?

To avoid the tax penalty of the individual mandate and protect yourself from the potential burden of unexpected medical expenses, you must have an appropriate health care plan. For Affordable Care Act plans, you can take a look at the different plans available in the public or private marketplaces and choose one that suits your needs in terms of coverage and cost. however, you should be aware that there is a certain length of time each year when you can enroll in these plans. this period of time is called the open enrollment period and typically runs from November 1 to January 15 of the following year, but may vary slightly depending on your location and whether your state has a state-run marketplace .

If you want to enroll in health insurance at a later time, you must qualify for a special enrollment period. A sudden loss of health care coverage or any other major disruptive life event, such as a divorce or moving, may allow you to enroll in a health insurance plan 60 days before or after the event.

If you live in or move to a state that requires health insurance, but health insurance still seems like an expensive and strange cost, you can always check to see if you qualify for a subsidy that will lower your premiums. Different subsidies are available, such as advanced premium tax credits, and anyone earning less than 400% of the federal poverty level may be eligible. in 2022, the income requirement for health insurance subsidies is $54,360 for an individual and $111,000 for a family of four.



income requirement to receive health insurance subsidies in 2022

another option is to sign up for medicaid. Medicaid is a federal program, but it is administered at the state level. Different states have different income limits that are usually designated as a percentage of the federal poverty limit. If you have questions about whether you qualify for Medicaid, eHealth’s licensed insurance agents can help you navigate the process.

Which States Require Health Insurance?: Frequently Asked Questions

How many months of health insurance do I need to avoid a tax penalty?

There is no longer a federal penalty for not having health insurance. In states that require health insurance and have a penalty, including Massachusetts, California, New Jersey, and Rhode Island, the consensus is that you must have at least nine months of health insurance coverage throughout the year. if you lose coverage for a month or two, you probably won’t be subject to any penalties, but you should be sure to document this gap for your taxes.

Is there a tax penalty for having a gap in my insurance?

A short break in coverage means you were without insurance for less than three months in a row. Even in states and districts that require health insurance, including Vermont, California, New Jersey, Rhode Island, Massachusetts, and Washington D.C., he likely won’t be subject to a fine. however, you must accurately document this gap on your state taxes, and keep in mind that only the first short gap in a year will qualify you for no tax penalties. if this happens again in future years, you will need to file another claim and get the exemption again.

why don’t people have insurance?

There are several reasons why people do not have insurance. for example, some people may believe that they cannot afford health insurance. there are other people who may not know exactly how to sign up for health insurance. There are also situations where people may not realize they lost health insurance when they left their job. Regardless of the reason people don’t have health insurance, it’s important to make sure you and your family are adequately protected. ehealth is here to help if you have any questions or concerns.

what are the risks of not having insurance?

If you don’t have health insurance, you run several big risks. For example, if you need medical care and you don’t have health insurance, you must pay for everything out of pocket. this could be prohibitively expensive, and there are some people who have to file for bankruptcy due to their medical bills. Of course, depending on where you live, you may also have to pay a penalty on your income tax. Because of these risks, you need to make sure you have the right insurance protection for you and your family. It will be a pleasure to help you with that.

what other states are considering individual mandates?

There are a few other states that are thinking about requiring people to have health insurance, including: connecticut, hawaii, maryland, minnesota, and washington. it is important to pay close attention to the information distributed by the local state legislature. That way, if you live in an area that requires health insurance, you’ll be prepared accordingly.

get affordable health care in your state

If you’re looking for health insurance in your state, it doesn’t have to be as expensive as you think. At eHealth, your health and financial well-being are important to us. As the largest online health insurance broker, we offer a variety of health insurance plans to meet your coverage needs, wherever you live in the United States. These include ACA-compliant plans on and off the stock market, major medical insurance, and short-term health insurance. let us help you explore your coverage options now. just click single & family health insurance to find affordable insurance. our licensed insurance agents are here to help and share their expertise as you consider your options.

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