It’s often repeated that health insurance in the United States is mandatory and that people are required to have a health insurance policy that meets standards known as “minimum essential coverage.” So, is it illegal to not have health insurance? Let us understand in detail.
A lot of people worrying about their policies, whether their health coverage is good enough and what they should do if they have a gap in their coverage. Could they be fined? Are they breaking the law?
The Affordable Care Act is confusing, and the law on minimum essential coverage changed as of 2019. Read on to learn about your obligations and what to look for to get the best deal on your health insurance.
Is It Illegal to Not Have Health Insurance?
When the Affordable Care Act was first introduced, Americans were required to have health insurance that met the minimum essential coverage level. Failure to have adequate cover would result in a fine being added to your taxes.
As of the 2019 plan year, the fine is no longer in place. This leads to an interesting situation where, technically, the law still requires people to have health insurance, but there is no penalty for failing to take out an appropriate policy. So, is it illegal to not have health insurance?
While there is no federal penalty for having a certain level of health insurance coverage, individual states do require residents to have adequate health insurance. It’s important to check your state obligations to ensure you are meeting them and to understand whether or not it is illegal to not have a health insurance.
The Affordable Care Act Explained
The Affordable Care Act was created in 2010 with the goal of ensuring that everyone could access affordable health insurance. Prior to the introduction of the act, individuals with pre-existing medical conditions often struggled to access affordable care.
In addition, some who were diagnosed with serious or complex health conditions that required expensive treatment would find their policies would be cancelled or that there was a cap on the amount the insurance provider would spend on their health care per year or even during the lifetime of the policy.
The Affordable Care Act changed that, requiring insurance companies to provide coverage to all and preventing them from charging extra for pre-existing conditions or discriminating against those who needed more expensive care.
Under the first iteration of the Affordable Care Act, individuals were required to have a health insurance policy that met certain standards. Those who did not sign up for a policy would be penalized when they filed their tax returns.
Everyone was required to sign up for health coverage during an open enrollment period every year. If they missed that open enrollment window, they would either have to pay the penalty or register for health insurance during a special enrollment period.
There are several special enrollment windows for people who have had a change in circumstances (such as getting married) that allow people to take out health insurance outside of the standard window. There are also special provisions for those who have lost their jobs and consequently their job-based health insurance, which are known as COBRA continuation.
How the Affordable Care Act Has Changed
The Affordable Care Act has been controversial since its introduction, and it has seen some changes in the Trump Era. Most notably, in 2019 the Individual Mandate (e.g. the part of the law requiring people to have adequate coverage) was changed significantly.
The law has not been completely repealed, however. Individuals are still required to have adequate cover either through the ACA Exchange, their employer or independent arrangements, but if someone does not have coverage for the 2019 plan period or beyond, they will not have to pay a financial penalty.
Of course, it’s still worth getting the best health insurance you can afford for you and your family because hospital treatment and drugs can cost more than you might expect. Health insurance gives people peace of mind that they and their loved ones will be taken care of in the event of an emergency.
Which States Still Require Health Insurance
While the federal requirement to have health insurance is no longer enforced, there are still some states that do impose financial penalties on individuals who fail to take out a suitable health insurance policy. Health insurance is required in the following states:
- New Jersey
- Washington, D.C.
These states will impose a tax penalty on individuals who do not have health insurance. The way the penalties are applied, however, is not uniform.
For example, in Massachusetts, eligibility for health insurance subsidies and the amount of any applicable fine is based on an individual’s income in relation to the Federal Poverty Line. Penalties in California are also calculated based on income.
What’s the Future of the Affordable Care Act?
The Affordable Care Act has always been controversial, and President Trump has spoken many times about his desire to reform the act. If the Trump administration is able to bring about reforms to the Affordable Care Act, we could see many parts of the bill changed, including the removal of protections for policyholders relating to policy cancellation and spending caps.
Any reforms could also see the health insurance system become more market-led, with companies being allowed once more to refuse coverage to people with pre-existing health conditions or to charge more for those who have chronic conditions.
It’s likely that the current (albeit unenforced) requirement to have health insurance could be completely repealed, giving individuals the freedom to decide whether they wish to pay for health insurance or take the risk of having to pay for all of their healthcare-related expenses out of pocket.
Finding Affordable Health Insurance
The health insurance marketplace can be confusing. There numerous Parts of Medicare to consider, and there is the separate issue of dental and vision insurance. Families may also need to consider co-payments, networks and whether they can still make use of their favorite primary care physicians or pediatric physicians.
At TrueCoverage, we aim to make the process of taking out health insurance stress-free and affordable. The process of getting a quote takes less than a minute, and once you have filled out your details, you will be given a quote that is tailored to you and your family’s unique needs.
The first A in ACA stands for Affordable, and we’re committed to offering competitive, fair rates for fair medical coverage. Our insurance policies are clearly laid out so you’ll know exactly what deductibles you will have and how much you’re paying. With TrueCoverage, insurance is simple.
If you’d like to know more about health insurance, whether that’s Medicare or ancillary insurance solutions, get in touch with us today! Our team of insurance experts are ready to advise you and offer a competitive health insurance quote for you and your family. Get your free quote now and get peace of mind that your health care expenses are covered for the future.