But there are some areas of the country where penalties still apply if a person is uninsured and not eligible for an exemption. This article will explain the basics of the ACA’s individual mandate, and where residents are still potentially subject to a tax penalty if they go without health insurance.
As of 2024, there are financial penalties for being uninsured in Massachusetts, New Jersey, California, Rhode Island, and the District of Columbia. Vermont requires residents to maintain health coverage and report their coverage status on state tax returns, but does not have a financial penalty for being uninsured.
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This includes guaranteed-issue coverage regardless ofpre-existing conditions, premium tax credits (subsidies) that make coverage more affordable, coverage foressential health benefits, the elimination of annual and lifetime benefit maximums, and the expansion of Medicaid.
But the individual shared responsibility penalty, aka the individual mandate penalty, was always an unpopular provision of the law. The mandate went into effect in 2014, requiring almost all Americans to maintain health insurance coverage unless they areeligible for an exemption.
From 2014 through 2018, the IRS assessed a penalty on tax filers who didn’t maintain coverage and who weren’t eligible for an exemption. The individual mandate itself still exists (and qualifying for an exemption from the mandate still allows a person to buy acatastrophic health planeven if they’re 30 or older). But there is no longer a federal penalty for non-compliance.
Is There a Penalty for Being Uninsured in 2024?
Individual Mandate Penalty Repeal
They also argued that the mandate was not severable from the rest of the ACA, and so the entire ACA should be declared unconstitutional.
State Individual Mandate Penalties
With the elimination of the federal individual mandate penalty, some states have implemented their own mandates and penalties:
Most of the states with individual mandates have modeled their penalties on the federal penalty that was used in 2018, which is $695 per uninsured adult (half that amount per child), up to $2,085 per family,or2.5% of household income above the tax filing threshold, although there are some state-to-state variations.
In the states that have individual mandates and associated penalties, a variety of exemptions are available. The exemption criteria are generally similar to the exemption criteria used for the federal government’s individual mandate, but there are some variations from one state to another.
Vermont has an individual mandate that took effect in 2020, but the state does not impose any sort of penalty for non-compliance.
Maryland created a program under which the state tax return asks about health insurance coverage, but instead of penalizing uninsured residents, the state is using the data in an effort to get these individuals enrolled in health coverage.Several other states have since followed Maryland’s lead in creating an “easy enrollment” program.
Effects on Insurance Premiums
The elimination of the individual mandate penalty in 2019 contributed to higher individual market (non-group) premiums for 2019.
This was because insurers expected that the people likely to drop their coverage after the penalty was eliminated would be healthy, whereas sick people would tend to keep their coverage regardless of whether there’s a penalty for being uninsured.
The penalty’s original purpose was to encourage healthy people to join the risk pool, as a balanced risk pool—with enough healthy people to offset the claims costs of the sick people—is necessary for any health insurance product to function.
According to rate filings for 2019 plans, average premiums would havedecreasedfor 2019 if the individual mandate penalty had remained in place. Instead, there was a small average increase in rates.Note that although averagebenchmarkpremiums decreased slightly in 2019,overall average premiums did increase that year.
The primary reason average premiums increased instead of decreasing for 2019 was the elimination of the individual mandate penalty, along with the Trump administration’s efforts to expand access to short-term health plans and association health plans.
Those non-ACA-compliant plans appeal to healthier individuals, so their expansion has the same effect as the penalty repeal, in terms of reducing the number of healthy people who maintain ACA-compliant individual market coverage.
However, because the ACA’s premium subsidies adjust to keep coverage affordable even when premiums increase, the majority of people who buy health plansin the exchange/Marketplacehave continued to do so. In fact, enrollment has grown to new record highs in recent years.
Although there was a drop in enrollment after the individual mandate penalty was eliminated, it was very modest: 11.75 million enrollees in 2018, dropping to 11.44 million in 2019, and then dropping only slightly in 2020, to 11.41 million.
Enrollment began to rebound in 2021, and has continued to grow ever since. More than 21 million people signed up for Marketplace plans during the open enrollment period for 2024 coverage,setting a new record high.
Even in the early days after the federal penalty was eliminated, enrollment in full-price plans—including everyone who purchases coverage outside the exchanges and everyone who didn’t qualify for subsidies in the exchange—dropped much more significantly than enrollment in subsidized plans.
But theAmerican Rescue Plan temporarily eliminated the income cap for subsidy eligibility, making subsidies more widely available and coverage more affordable for more people. And theInflation Reduction Actextended those provisions through 2025. This was a significant factor behind the record-high enrollment in 2022, 2023, and 2024.
Why Does It Matter Whether People Have Health Insurance?
The ACA’s individual mandate penalty was never popular, but unsubsidized premiums for individual/family health insurance would have been lower in 2019 if the penalty had not been eliminated. And that continues to be baked into the rates that insurers have used in subsequent years.
Before 2014, there was no mandate, but insurance companies in most states could decline applications or charge additional premiums based on applicants' medical history.
Once coverage became guaranteed-issue (meaning insurers could no longer consider applicants' medical history), it became necessary to impose some sort of measure to ensure that people maintain coverage year-round.
Otherwise, people would be more likely to go without coverage when they’re healthy, and only sign up for coverage when they need health care, which would result in higher premiums.
Another factor that has prevented enrollment declines is the limited enrollment opportunities for individual/family health coverage. In other words, you cannot just purchase coverage whenever you like; it has to be during open enrollment or a special enrollment period (this applies outside the exchanges as well).
Limited enrollment windows had applied to employer-sponsored health coverage for decades. But they weren’t used for individual/family health coverage before 2014. The limited enrollment opportunities have helped to prevent situations in which people might otherwise wait to enroll in coverage until they need medical care.
Summary
There is no longer a federal penalty for not having health insurance. But in DC, Massachusetts, New Jersey, Rhode Island, and California, the state imposes its own penalty (collected via state tax returns) if a person doesn’t maintain health insurance and isn’t eligible for an exemption.
But nationwide, it’s still wise to have health insurance. Not having coverage means health care for a serious ailment could be unaffordable or completely inaccessible. And it is generally not possible to sign up for coverage outside of open enrollment if you don’t have a qualifying event (and many of the qualifying events now require the person to have already hadminimum essential coveragein place before the qualifying event). So maintaining continuous health insurance coverage is always in your best interest.
Frequently Asked QuestionsYes, the Affordable Care Act (also called Obamacare) is still in effect.In some places, yes, there is a penalty for not having health insurance. Massachusetts, New Jersey, Rhode Island, California, and Washington D.C each have their own insurance mandates and penalties. There is no federal penalty for being uninsured.The penalty for not having health insurance will depend on your income status and your state. Expectations and guidelines for these fees can change from year to year, so stay current on this information.
Frequently Asked Questions
Yes, the Affordable Care Act (also called Obamacare) is still in effect.
In some places, yes, there is a penalty for not having health insurance. Massachusetts, New Jersey, Rhode Island, California, and Washington D.C each have their own insurance mandates and penalties. There is no federal penalty for being uninsured.
The penalty for not having health insurance will depend on your income status and your state. Expectations and guidelines for these fees can change from year to year, so stay current on this information.
17 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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Centers for Medicare and Medicaid Services.Trends in subsidized and unsubsidized enrollment.
HealthInsurance.org.Is there still a penalty for being uninsured?
Internal Revenue Service,Individual Share Responsibility Provision
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