Is Health Insurance Mandatory in the US?

Agnus Smith | Published: October 09, 2017

Stamping word mandatory

The Affordable Care Act (ACA), popularly known as Obamacare, made mandatory health insurance law for all Americans. Right? Well, sort of yes and sort of no.

Obamacare aimed to fix healthcare in the US. Its concept was to create affordable health insurance by making it universal and creating a healthcare marketplace for each US state. It also expanded Medicaid, but not all states opted into this expansion.

The general idea is that if you do not participate by making sure you are covered, you have to pay a penalty for opting out. This comes in the form of a fine on your federal tax return.

While the aim was to provide universal healthcare in the US, the actual law was about insurance, not healthcare per se. The reality is that there is a long list of exemptions, so many people are not actually subjected to the so-called mandate. Here are some of the most basic exemptions to the mandatory health insurance rule:

  • Homelessness
  • Incarceration
  • Your income is so low that you aren't required to file a tax return.
  • You had coverage for at least nine months out of the year.
  • You belong to a Native American tribe.
  • Religious objection
  • You were unable to find affordable health insurance costing no more than 8.13 percent of your income.
  • You are here in the US illegally.
  • You participate in a healthcare sharing ministry.
  • You qualify for a hardship exemption.

That last item is fairly vague and subject to a judgment call. If you want a hardship exemption from mandatory health insurance, you will need to apply for it through the administrator of your state's healthcare marketplace. Here are some examples of personal hardships that may qualify:

  • Eviction
  • Foreclosure
  • Bankruptcy
  • You received a utility shut-off notice.
  • Extensive property damage from fire, flood et al.
  • You were a victim of domestic violence.
  • Your state didn’t expand Medicaid and you otherwise would have qualified.
  • Death in the family.

This is not a comprehensive list. If you had any significant life events that constituted a financial hardship resulting in loss of health insurance, you may qualify for an exemption. It wouldn't hurt to apply.

Obamacare is currently under political assault. The Trump administration promised to repeal it, so healthcare in the US is in flux. One of the very first things President Trump did when he took office was to instruct administrators to interpret things more loosely. He felt that mandatory health insurance was a burden on American citizens. He wanted to lighten that burden.

However, his goal of quickly repealing mandatory health insurance was not realized. It got a lot of pushback in Congress. The process stalled and is dragging out. Trump may not succeed. Thus, the future of healthcare in the US is unclear.

If President Trump gets his way, mandatory health insurance will go the way of the dinosaur. Some people think this is a good thing, while others are singing a different tune. Regardless of which side of the debate you are on, you need to either comply with the current law or literally pay the penalty.

The penalty will be hardest to escape for conscientious objector types. In other words, if you are comfortably well off, can afford the mandatory health insurance, but you just don't want to go along with the current scheme.

If getting healthcare in the US is an actual burden for you, there is a silver lining. You may be able to argue that it doesn't apply to you. The ACA was intended to make things better for Americans, not worse. If the penalty involved is threatening to make your life worse because it would be a hardship, you can request an exemption.

In fact, you may not need to request an exemption. If you fall into certain categories, you are automatically exempt. You would just need to state or document that you qualify.

Keep an ear out for changes. Mandatory health insurance may be repealed. For now, it is the law, though there are exemptions.