The ACA Tax – What's the Federal Tax Penalty for No Health Insurance?

Jenifer Dorsey
July 19th, 2019 March 21st, 2019 |
Read time: 3 minutes

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If you’re uninsured, you may be wondering how much of a federal tax penalty you’ll owe. Starting with coverage year 2019, it could be $0.

Until now, the Affordable Care Act (ACA), which is sometimes referred to as Obamacare, required most individuals to have health insurance that qualified as minimum essential coverage or pay a federal tax penalty.

That’s no longer the case. On Jan. 1, 2019, the federal tax penalty was eliminated,1 which means you won’t have to pay it if you go without ACA-compliant health insurance (aka minimum essential coverage) in 2019. However, some states have enacted state-level individual mandates and penalties.2

The federal tax penalty still applies for 2018 and earlier

If you went without ACA-compliant health insurance in 2018 for more than a single period of up to three months and were not otherwise exempt from the individual mandate, then you may owe the federal tax penalty when you file your 2018 federal income taxes.

How will you know if you owe it and how much you owe? Your 2018 federal tax penalty will be determined when you file your 2018 federal income taxes. Depending on your circumstances, you will report your ACA-compliant health insurance coverage or claim an exemption from the individual mandate.

You can learn more about this process at IRS.gov or speak with a tax professional.

Estimate your federal tax penalty at IRS.gov.

Learn more about exemptions.

The other costs of going without health coverage

The cost of going without health insurance extends beyond a federal tax penalty. If you need healthcare while uninsured, you will be responsible for paying your medical bills 100% out of pocket. You may want to consider the following coverage options available to help you pay for healthcare:

Alternative + supplemental health insurance

There are non-ACA-compliant health insurance options that can have lower premiums than unsubsidized individual major medical insurance policies; however, this coverage is less comprehensive than ACA-compliant policies, does not include all of the essential health benefits, and are not guaranteed issue (you can be denied coverage based on health history).

Short term medical (STM) health insurance, a type of temporary coverage that lasts as few as 30 days and up to 364 days, depending on your state laws for STM. Short-term policies include benefits for a range of medical expenses such as doctor office visits and trips to the emergency room.

Get an instant STM insurance quote

Hospital indemnity insurance provides fixed benefits for hospital-related expenses such as hospital room and board, inpatient and outpatient surgery, ambulance services and inpatient physician visits (some plans include coverage for critical illnesses such as cancer and stroke).

Benefits are paid as set amounts regardless of what your provider charges and are paid at specific durations (e.g., per day, per week, per visit, depending on the plan you select and the specific benefit being used).

In some states, hospital indemnity policies may not be purchased unless you already have a major medical policy.

Get an instant hospital insurance quote

ACA-compliant major medical insurance – If you don’t have access to job-based health insurance, you can purchase individual health insurance that is ACA-compliant, which means it fulfills all ACA requirements (e.g., it’s guaranteed issue and has all of the essential health benefits). You can buy individual health insurance the following ways:

Income-based subsidies are available to those who qualify and buy individual health insurance through HealthCare.gov or a state exchange. Find out how to calculate your subsidy.

You can only purchase individual ACA-qualifying major medical insurance plans during the annual open enrollment period. If you need this type of coverage now, you may want to see if you qualify for a special enrollment period.

Find out how to qualify for special enrollment.

Summary + next steps

With the repeal of the federal tax penalty, you may feel like you have more options, including the option to go without any health insurance at all. But remember, the ever-increasing costs of medical care can quickly surpass what most of us have in our savings, and it’s impossible to predict how much or little medical care you may need in the coming year, making it almost impossible to plan and budget for the expense.

And that’s where a health insurance policy comes in.

You can consider coverage like a short term health policy, hospital insurance or ACA-compliant major medical health insurance to help pay for medical expenses throughout the year.

Need help getting started? Call 888-855-6837 to speak with an agent.

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Originally Published On January 7th, 2016
Independence American Insurance Company, Madison National Life Insurance Company, Inc. and/or Standard Security Life Insurance Company of New York may underwrite the products referenced on this website. Legal Disclaimers.

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