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What's the Penalty for Not Having Health Insurance?

Meredith Miller | Published: June 14, 2018

Referee penalty flag

Updated: December 22, 2017

Health insurance today is different than when your parents were your age. That’s because, in 2010, the Obama Administration passed the Affordable Care Act, commonly known as Obamacare. As you can probably guess from the name, this piece of legislation aimed to provide affordable healthcare for all Americans. However, the Affordable Care Act also implemented a health insurance penalty if you choose not to enroll in a health plan. So how much will not having coverage cost you?

How much is the penalty for no health insurance?

If this is your first time paying a tax penalty, or even if you have paid one before, you may already know that figuring out how much you owe is no walk in the park. The penalty for not having health insurance in 2017 is a bit complex, but let’s simplify it by breaking it down.

Penalty Breakdown

First, understand there are two different ways your health penalty can be calculated. The first is a percentage of your income, and the second is just a flat fee. You will pay whichever amount is greater.

Penalty TypePenalty AmountMaximum Penalty
Percentage:2.5% of household incomeTotal yearly premium for a Bronze Plan
Flat Rate:

$347.50 per child

$650 per adult

$2,085 per household

It’s important to note that the fine for not having health insurance may see an increase for 2018. You can check back here to see if any changes have been made.

Health insurance penalty calculator

Thankfully, the internet is a wonderful place fool of many tools that make our lives easier. If you still aren’t sure how to calculate what your health insurance penalty for 2017 may be, you can use our simple health insurance tax penalty calculator.

There is step by step directions that will easily allow you to calculate your tax penalty, just make sure you know what year you are filing for, your household income, how many people in your household, and how many months you were uninsured for.

How long can you go without health coverage

Under Obamacare, you could go without coverage for a maximum of 2 consecutive months without having to pay a tax penalty. Essentially, if you had coverage for at least 10 months, you don’t have to worry.

However, President Trump decided to switch up the rules just a bit. Now, you can go without health insurance for 3 consecutive months before you become liable for a tax penalty. Not a bit change, but can be significant for those who are struggling to find affordable health insurance.

Do you qualify for an exemption?

The point of the Affordable Care Act is to make life financially easier for Americans, so those who can’t find health insurance quotes that fit their budget may not have to pay up.

There is a list of exemptions that you may already qualify for, with the most common exemption being a financial hardship. If the minimum cost of health coverage would equal more than 8% of your household income, you may not have to pay a dime. Other exemptions include:

  • You are a US citizen living abroad or certain noncitizens
  • Not lawfully present in the US
  • Member of a healthcare sharing ministry
  • Member of a Federally-recognized Indian Tribe
  • You are incarcerated
  • You are a member of certain religious sects

Keep in mind that if anything on this list applies to you, you still may be required to pay your fine for not having health insurance. You still need to check and file for an exemption next tax season.

Avoiding the health insurance penalty

The easiest way to avoid paying the health insurance penalty is to enroll in qualifying health coverage. The reason you need a qualifying health plan is that, without one, you may still have to pay a fine.

You can learn more about qualifying health coverage here, but all individual health insurance plans will be considered qualifying coverage if purchased through the health insurance marketplace. If you are purchasing health insurance outside the marketplace, make sure your plan meets the minimum essential coverage outlined in Obamacare.

Finding affordable health insurance plans

If you are like most Americans, you are probably looking for an affordable health insurance plan that still keeps you protected. Contrary to popular belief, there actually are low-cost health insurance plans available, you just need to follow these easy steps.

1. Determine what you need

You don’t want to overpay for health insurance, that’s why you need to sit down and figure out what you need before you begin your search. How often do you visit the doctor? How many people will be on the plan? Do you or someone else on the plan need prescriptions covered? Do you have any pre existing conditions? Answer all these questions so you don’t get stuck with a plan that doesn’t offer sufficient coverage for your situation, or a plan that covers too much.

2. Read health insurance reviews

There are plenty of free and useful reviews available to you online. First Quote Health, for example, offers in-depth reviews on plans and pricing for many of the major carriers in your area. Do your research so you don’t get stuck with a company who is notorious for denying claims.

3. Compare health insurance quotes and save

You never want to enroll in the first health plan you find without seeing what else is out there. The best way to find affordable health coverage is to shop around for health insurance quotes. First Quote Health even makes it easy for you! All you have to do is enter your zip code and then you can view all the best rates from the top health insurance companies in your area.

The Affordable Care Act’s Individual Mandate

In its most general sense, a mandate is a requirement by law to do something. In this case, the individual mandate is a requirement by the federal government that mandates every American have health coverage.

Why is there an individual mandate?

Without getting into the controversy too much (we will touch upon it in a bit), you may be wondering why you are forced to have health coverage. Well, the answer is a pretty simple. The individual mandate also has another name, the individual shared responsibility payment.

When Obamacare was passed, it created a health insurance marketplace, also known as the health insurance exchange. Health insurance companies were able to sell affordable health insurance plans but were no longer allowed to charge more for individuals with pre existing conditions.

If health insurance companies have to charge everyone the same price, then in order to compensate for the increased costs from members with pre existing conditions, monthly premiums would be driven up. In order to keep health insurance affordable, everyone is required to enroll in a health plan.

The GOP vs. the individual mandate

It’s no secret that the GOP isn’t a fan of the Affordable Care Act, especially the individual mandate. Americans on both sides of the political spectrum have come out against this controversial piece of legislation claiming that it infringes on the individual liberties of the American people. However, supporters of this bill state that the individual mandate is a necessary measure to ensure that everyone has access to affordable healthcare.

President Trump ran on a platform that vowed to repeal and replace Obamacare, and so far he’s been unsuccessful. However, on October 12, 2017, President Trump signed an executive order that makes several key changes to the Affordable Care Act.

These changes will expand access to association health plans (available to small businesses, as well as trade groups and other associations) and ease restrictions on short-term health plans. President Trump has also requested that the Secretary of Labor allow employers to use pre-tax dollars to help workers pay for medical expenses, whereas under the current rules of Obamacare, the reimbursements were made only if the expenses fell under the policy guidelines.

The executive order also commissions a study to limit consolidation with the insurance and hospital industries; and finally, it will direct insurance agencies to increase the competition, thereby giving consumers more choice when it comes to affordable health insurance plans. These changes will not take effect until mid-2018.

However, if and when they do, it will mean higher costs for those with chronic illnesses, as the healthy carriers drop their current plans for cheaper ones, thereby driving up the costs for the people who rely on the more comprehensive plans for the treatments they need.

Will you have to pay a penalty in 2018?

President Trump and the GOP have not lost faith that they will save you from the Obama era health insurance penalty in 2018, but as of right now, you are still on the hook. That’s not to say that new laws won’t be passed before 2018 taxes are due, but it’s better to stay safe. As of right now, it may be costlier for you to go without health insurance than to enroll in a plan.

You can use First Quote Health to compare health insurance quotes in your area and use the Health Insurance Penalty Calculator to see which is more expensive. Remember, it’s never a good idea to go without health coverage because you may be liable for costly medical bills.