Effective January 1, 2019, the federal tax penalty for going without ACA-qualifying health insurance was eliminated.[0]
But wait…before you go…
There are a couple of important things to be aware of:
- There are some instances in which you may still owe a tax penalty
- The Affordable Care Act (ACA) individual mandate was not repealed
- The ACA (also referred to as Obamacare) was not repealed
Even though there’s no longer a penalty for not obtaining comprehensive major medical insurance, it is still a good idea to get some level of coverage.
Even though policies have less coverage than comprehensive major medical, you may be able to get non-ACA, limited-benefit health insurance for a relatively affordable monthly premium with benefits for emergency medical care and hospitalization.
Could you still owe a tax penalty?
Possibly.
There are two scenarios that could result in your owing a penalty for not having ACA-qualifying minimum essential coverage.
1. You live in a state with its own state tax penalty.
Even though the federal tax penalty is eliminated, if you live in a state that has implemented a state individual mandate and tax penalty, you could still have to pay that if you don’t obtain minimum essential coverage.
2. You went without minimum essential coverage during a year prior to 2019.
The tax penalty was eliminated effective January 1, 2019[1] and is not retroactive.
If you didn’t have minimum essential coverage and did not obtain an exemption for any year between 2014 and 2019 for which you still owe taxes, you could owe the federal penalty.[2]
Please note: the materials available at this web site are for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney or tax professional to obtain advice with respect to any particular issue or problem.
Was Obamacare Repealed?
No. The Affordable Care Act remains law[3] and the rest of the ACA remains in-tact:
- Premium tax credits continue to be available to those who qualify.
- Coverage is guaranteed-issue regardless of health history and you can’t be charged more due to health status.
- ACA health plans cover the essential health benefits.
There is a serious legal challenge to the ACA making its way through the federal courts as of 2019.
The case is called Texas v. Azar and is an effort to further undermine parts of the ACA, such as pre-existing conditions coverage, or to repeal the entire ACA.[4]
Was the Individual Mandate Repealed?
No. The individual mandate, also referred to as the “individual shared responsibility provision,” technically remains in effect as part of the ACA.[5]
However, the tax for violating the mandate, referred to as the “individual shared responsibility payment,” was set to $0 via a 2017 tax bill: The Tax Cuts and Jobs Act.[6]
In plain language, that means that even though the mandate is technically still in effect, there is no federal tax penalty if you don’t comply with it.
What Are Your Health Insurance Options Now?
Did the tax penalty factor in your decision as to whether or not to enroll in ACA-qualifying coverage in the past? If so, you may be wondering if there are lower-cost insurance options available to you now, or if health insurance is even worth the cost.
Below we’ll look at three options:
- ACA-qualifying major medical
- Short term health insurance
- Combination non-ACA health insurance coverage
Each option has different costs, coverage and benefits levels associated with them so it’s very important to understand any health insurance policy you’re considering.
ACA-Qualifying Major Medical Insurance
Major medical insurance typically has higher premiums, particularly if you don’t qualify for a federal subsidy to offset that cost. But that’s because ACA-qualifying insurance also has the most coverage and consumer protections.
ACA plans:
- Are guaranteed-issue
- Cover essential health benefits, including preventive care
Can be purchased with premium tax credits from the federal Marketplace if your income qualifies you for a subsidy - Are only available during the annual open enrollment period or if you qualify for a special enrollment period
Do You Qualify for an Affordable Care Act Subsidy?
Use the ACA Subsidy Calculator to find out if you can get financial help if you enroll in ACA-qualifying major medical insurance. Learn more about subsidies.
Short Term Health Insurance
With monthly premiums that are less than unsubsidized major medical premiums,[7] short term health insurance is a non-ACA health insurance option that provides limited benefits for hospital room and board; emergency room, anesthesiology, and surgical care; diagnostic services (x-rays, lab tests and analysis); ambulance and surgical services.
A short term medical policy should not be considered a replacement for major medical insurance. Some limits of short term medical plans include:
- They are not guaranteed-issue, you must be approved by the carrier in order to enroll.
- They are not considered minimum essential coverage and have less coverage than major medical plans.
- Pre-existing conditions are not covered and they cover few, if any, of the essential health benefits.
- There are annual limits on the amount of benefits you can receive.
Some features of short term medical plans include:
- No open enrollment period so you can apply year-round in most states.
- Highly customizable plans so you don’t have to pay for coverage you don’t need.
- No provider network limitations mean you can visit your preferred healthcare provider.
- Policies available for 30 to 364 days depending on your state (or possibly up to 36 months depending on the policy renewal rules in your state).
See if a short term medical plan is available for you and start comparing costs and coverage.
Get a Short Term Medical Quote
Combination Non-ACA Health Insurance Coverage
One way to get more health benefits is to enroll in a combination of limited-benefit or supplemental health insurance plans such as:
Hospital Indemnity Insurance: For additional fixed indemnity benefits on a per day, week, month, visit or event basis to help with costs if you are admitted to the hospital. In some states, you can only obtain a hospital indemnity plan as a supplement to a major medical policy.
Dental Insurance: To help make regular teeth cleanings (an important part of good overall health) more accessible. Dental insurance monthly premiums are typically affordable.
Telemedicine: Can help improve your access to the healthcare services that you may otherwise visit urgent care or a doctor’s office for. Get a diagnosis, treatment plan and even a prescription for non-acute recurring conditions like sinus infections, allergies, and UTIs. Telemedicine is not insurance.
Combination Coverage Customized For You
Missing coverage for some healthcare services or have high out-of-pocket costs on your major medical plan? Increase coverage or benefits with additional health insurance products and add-ons.
Speak to a licensed agent today to learn more.
Summary + Next Steps
You won’t owe a tax penalty in most states for going without minimum essential coverage. However, you should weigh the potential risks and costs of going without health insurance at all.
If the unexpected does happen and you require emergency treatment or hospitalization, the associated medical bills could be quite high.
If an ACA health plan isn’t available to you right now, whether due to cost or because you’re unable to enroll, a lower-premium short term medical policy as temporary coverage or as part of a combination coverage option may be able to help.
You can get a short term medical insurance quote to see if plans are available in your area and compare costs and coverage options.
Want professional help assessing your coverage needs? Call (888) 855-6837 to speak to a licensed agent.
