According to the Affordable Care Act (ACA), every citizen of the United States must have health insurance coverage. Even if it is a basic plan, insurance companies want you to get one, not only for yourself but for the sake of your family too.
But let us put in a scenario: you have the money to afford a health insurance plan, but you decide not to get one. In that case, you would be forced to pay a penalty for this act, but nowadays, this is a more flexible topic.
Getting fined for not choosing to have insurance depends on the state you are in. That is the reason why you should opt for an insurance plan, if not, then be ready to pay for the penalty.
It was not always that you would not get fined for not having insurance. Before 2019, the ACA stated that if you did not have an insurance plan, you would have to pay a tax rate as a penalty.
This fee is called the Individual Shared Responsibility Payment, a way to tell people that they need to get any type of health insurance. Not only has it applied for people who do not want to buy one, but also if your company where you are working does not offer you one.
There are two ways on how you have to the tax penalty, and once you calculate both, you are required to pay the one that is higher. These are:
- Per person. In this, you have to pay a certain amount for each person in your household who does not have health insurance. For adults, it was $695, and for children younger than 18 years old you would have to pay $347.50.
- Percentage method. You will have to pay 2.5% of your household income.
Health insurance after 2018
It may have sounded troublesome to pay for taxes if you did not have insurance, but at the end of 2018, the Individual Shared Responsibility Payment was taken down.
So do not worry if you did not have the minimum essential coverage needed for avoiding taxes, starting in 2019 all federal taxes do not apply for health insurance. This also helps people to take their time on choosing which insurance benefits them the most. However, other governments do not think the same.
➡LEARN MORE: What to do When Health Insurance Denies a Payment
State individual mandates
Even though ACA said that the Individual Shared Responsibility Payment does not apply anymore, there are states that still put up a penalty fee. This means that, if you are a resident of the following states, you might be in trouble with these individual mandates if you do not have an insurance plan:
- District of Columbia
- Rhode Island
- New Jersey
Some of these penalties only apply to adults, but as time passes, more restrictions can come up in their individual mandates. However, California and Rhode Island put up a penalty for non-compliance, which is more dangerous than federal taxes.
Keep in mind that the amount that you have to pay varies in the state that you are residing. Some of them follow the percentage method and per-person method, so now you have a clear idea of what to expect.
The necessity of a health insurance plan
We recommend that even if you reside in a state where you will not get fined, you should still get health insurance. You never know when you will need it, and not having one puts your loved ones in a great risk.
Imagine that you need to take an emergency surgery, and your family does not have the necessary income to pay for it. If you have health insurance, you could avoid these problems easily, so now is the time to afford one.