There are some types of insurance that are illegal not to have. For example, not having car insurance if you drive a car is illegal.
Other types of insurance are totally optional to have. Life insurance falls into this category. No one has to buy a life insurance policy. It’s up to you whether you want one or not.
Then there’s health insurance. As expensive as health care and getting medical treatment is in the U.S., most people can’t afford to pay for it out of pocket. That’s why we need health insurance. It helps us pay for doctors visits, prescription drugs, hospitalization and more.
So most of us definitely need health insurance. But do we have to have it? Is it illegal to not have health insurance in the U.S.?
Read on to find out!
Is It Illegal To Not Have Health Insurance?
The short answer is not really. But there’s a bit more to the story than that.
Basically, once upon a time there was a mandatory coverage requirement for health insurance for every adult citizen.
This was put in place upon the formation of the Affordable Care Act, also known as the ACA or Obamacare. As part of the ACA the federal government made it necessary for every adult citizen to have minimum essential coverage.
So you either had to have at least minimum health insurance coverage through your work, through a government program like Medicare or Medicaid, or through the ACA. If you didn’t have health insurance through work or Medicaid/Medicare, you had to sign up for a plan through the ACA.
The Reasons For the Individual Mandate
The minimum essential coverage, also known as individual mandate, was beneficial for a few reasons.
Overall the mandate makes the ACA stronger and more reliable. The more people who enroll in ACA health insurance plans, the more financially stable the program will be. And also so that the premiums will not be too high for people. The more people in the program, the lower the premiums need to be.
Also, a big part of the ACA is that everyone is guaranteed to get health care coverage. Even if you have a pre-existing condition. Which is a big deal since many people with pre-existing conditions find it hard to get affordable health insurance.
To make this make financial sense for health insurance companies to cover everyone, the government needs as many people as possible to enroll in a health insurance plan.
This is why there was a mandate for health insurance.
But is it illegal to not be part of the individual mandate? Well, the answer to that is no. It is not a crime to not have health insurance. But the ACA originally had penalties for those who did not.
Basically the penalty of not being enrolled in the ACA is that uninsured people have to pay certain taxes. This tax is also known as the responsible tax penalty.
Bye Bye Penalties (For the Most Part)
Although there was a tax penalty for not having insurance back then, that is no longer the case now in most states. In 2017, the Congress made their first appeal against the responsibility tax penalty.
Then in 2019, it became a law under the “Tax Reconciliation Act”. So now most states do not have a penalty for those who don’t have health insurance. However, there are still 5 states plus the District of Columbia that charge a tax penalty for not having health insurance.
These 5 states are:
- Massachusetts
- New Jersey
- Vermont
- California
- Rhode Island
- Washington D.C.
So in conclusion, there used to be a penalty for not having health insurance back then. However, that was abolished and now only exists in the states above.
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