A significant change in U.S. healthcare policy occurred when the Republican-controlled Congress repealed the individual mandate penalty under the Affordable Care Act (ACA) in late 2017. This means that starting in 2019, the federal government no longer penalizes individuals for lacking health insurance coverage.
However, residents in certain states should remain cautious. Several states have maintained their own health insurance mandates, meaning uninsured individuals may still face penalties when filing state tax returns in 2020.
States Enforcing Health Insurance Penalties in 2019
The following jurisdictions continue to impose penalties for residents without health insurance coverage in 2019:
-
Massachusetts
- Penalties apply only to adults based on federal poverty level percentages
- Individuals below 150% FPL: No penalty
- Individuals 150.2%-300% FPL: Half the lowest Connector Care premium
- Individuals above 300% FPL: Half the lowest Bronze plan premium
- Married couples pay combined individual penalties
-
Washington D.C.
- Calculation matches former federal penalty: $695 per adult or 2.5% household income (whichever is higher)
- Penalty cap based on local Bronze plan averages
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New Jersey
- Same calculation as 2018 federal penalty
- Penalty funds support state reinsurance program to lower premiums
States Implementing New Penalties in 2020
Two states will begin enforcing health insurance penalties starting with the 2020 tax year:
- California
- Rhode Island
California will simultaneously introduce premium subsidies to help residents afford ACA-compliant coverage, potentially offsetting the financial impact for many households.
Understanding Penalty Exemptions
Similar to former federal exemptions, states maintaining individual mandates typically offer hardship exemptions. Qualification criteria vary by state and may include financial difficulties, life circumstances, or religious objections. Residents should consult state-specific guidelines when preparing tax filings.
The Limitations of Short-Term Health Plans
Short-term health insurance policies do not satisfy ACA requirements in states maintaining individual mandates. These plans often exclude essential health benefits and may deny coverage for pre-existing conditions. While offering lower premiums, they provide significantly less protection than ACA-compliant plans and won't exempt holders from state penalties.
Consumers should carefully review policy details before purchasing any health coverage, verifying whether it meets their state's minimum essential coverage standards.