Do I Have to Pay a Penalty if I Don’t Have Health Coverage?

Researcher & Writer
February 18, 2016

The short answer is yes. It all depends on your income and eligibility for different programs and your willingness to seek out health insurance coverage. Under the Affordable Care Act, you are required to have health insurance or be at risk of paying a penalty.

If you can afford health insurance and choose not to purchase it, then you will have to pay what is called an individual shared responsibility payment. This has also been referred to as a penalty or individual mandate. The amount of the penalty will vary based on your income and household.

The Affordable Care Act has made it mandatory to have health insurance that qualifies under what it defines as minimum essential coverage. There are many plans available that fall under this definition. For example, here is a list of plans that offer approved coverage:

  • Plans provided through the Health Insurance Marketplace
  • Job-based plans
  • Medicare Part A and Part C
  • Medicaid plans except limited coverage plans
  • CHIP plans
  • Being covered under a parent’s health insurance
  • Any individual plans that meet the standards for qualified health care plans according to the Affordable Health Care Act
  • Student health plans provided through universities
  • Peace Corp volunteers health coverage
  • Most veterans coverage plans provided through the Department of Veterans Affairs
  • Most TRICARE plans
  • Medical assistance plans provided to refugees

This list does not include workers’ compensation, only vision or dental coverage, discount plans, or plans designed for specific diseases. There are many options in plans that will fill the need for healthcare coverage. If you qualify for a government-funded program such as CHIP, Medicaid, or Medicare, you can apply for those and be covered without having to worry about a penalty.

If you are not income eligible for those plans and you do not have one of the plans listed above, you will need to pay for insurance. Applying through the Marketplace can allow you to cut costs by receiving a premium tax credit that can be applied to your monthly premium costs. Another option is to seek out employment that includes health insurance. Even if it isn’t great health coverage, it will fall under the job-based plans category and exclude you from being penalized.

If you are ineligible for a government-funded program and refuse to buy your own health insurance, you will be charged a penalty. There are exceptions to this rule based on individual situations. When you apply through the Marketplace, if there are no programs available that you are currently eligible for, you may receive a notice stating you will be exempt from the risk of penalty due to the unavailability of coverage. However, this situation represents the exception, not the rule. There are many options in getting healthcare coverage that will allow you to avoid the personal penalty.

Written by
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