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Is There a Health Insurance Penalty in 2021?

Is health insurance required in the United States? The short answer: yes and no.

When the Affordable Care Act (ACA), or “Obamacare”, was launched in 2010, one of the biggest debates surrounding the law was not the idea of “healthcare for all” or what types of health incidents the ACA covers or doesn’t cover, but the idea that the act made health insurance mandatory for all Americans. While the law did not say anything like “you must have health insurance or you’ll go to jail”, it did create a tax penalty- popularly known as “the health insurance penalty”- for anyone without health insurance. One side of the political aisle said that this idea-  which simply became known as “the mandate”-  infringed on the freedom of Americans, while the other side felt that it was everyone’s right to have affordable health insurance, and a mandated public option would help keep costs down for everyone.

The Affordable Care act was launched nearly 10 years ago, and still never fails to be a major lightning rod in Washington, D.C. and in state government offices, especially during election season. While the individual mandate was lifted on the federal level in 2019, portions of the mandate still remain in the actual Obamacare law and in some states; these portions still create plenty of discussion everywhere in the United States.

What Is The Penalty For Not Having Health Insurance?

The national health insurance mandate was not as one-sided as we may have implied. While the mandate established a tax penalty for those without insurance, it also created a special premium tax credit for people with insurance, which served to help lessen the cost of health insurance. It also created provisions to expand Medicare for lower-income families. Congress voted to remove the federally mandated penalty for not having health insurance in 2017 via a law that became effective on January 1, 2019.

Some states, however, have their own insurance marketplaces, and have created their own mandated insurance, using a state tax penalty/tax credit system that is similar to the original federal system. As of early 2021, these states are as follows:

  • Massachusetts
  • Rhode Island
  • Vermont
  • California
  • New Jersey

In addition, the District of Colombia also has its own mandate. New Mexico, Kentucky, Maine, and Virginia are all expected to open their own marketplaces within the next two years, and Maryland, Hawaii, Connecticut, and Pennsylvania have made progress on creating mandatory healthcare law for their residents as well.

Pros and Cons Upsides and Downsides To Revoking The Health Insurance Penalty

In the words of the great Sir Isaac Newton, “with every action, there is an equal and opposite reaction”. In the case of the removal of the health insurance mandate, people quit their health insurance when it was no longer required in order to save money. Experts estimate that as many as 4 million people quit their health insurance solely based upon the removal of the health insurance mandate.

The biggest benefit of removing the mandate, especially for healthy young people, is that without having to pay for health insurance, a little more money can stay in one’s pocket. Stories have appeared of people who have used the mandate removal to their advantage, and have gotten rid of their insurance, then actually negotiated major health costs on their own and come out ahead of the system.

The downside, of course, is what Obamacare was originally created to avoid- not having health insurance is a major risk. Due to the extreme costs of healthcare in the US, most people without insurance or major savings are only one major medical crisis away from financial ruin or bankruptcy. Consider this- the average cost of an emergency room visit in 2018 was roughly $2000, which is nothing to laugh at, considering that in the pandemic era, surveys show that 25% of Americans have no emergency savings at all.

How To Compare Health Insurance

While the healthcare marketplace is one way to shop for insurance, there are other ways to shop that include other types of health insurance, such as private insurance and short-term coverage. The team at healthplanoptionstoday.com can help walk you through your options and get coverage in 3 easy steps, just click the button below to get started.

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