Do I Need Health Insurance?
You are required to have health insurance, or you will pay a tax penalty, if you live in California, Massachusetts, New Jersey, Rhode Island or Washington, D.C.
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Although you only need to have health insurance if you live in these states, it's still a good idea to have health insurance. While you may not face a tax penalty if you don't have it, health insurance helps cover you in case of a medical emergency.
Which states require health insurance?
California, Massachusetts, New Jersey, Rhode Island and Washington, D.C. require residents to have health insurance or pay a tax penalty. These rules are called individual mandates and vary by state. However, there are possible exemptions you can get, meaning there are some instances when it's OK not to have health insurance.
Vermont's individual mandate is different in that it requires you to say if you have coverage on your taxes, but there's no penalty for being uninsured.
State | Exemptions | Tax penalty |
|---|---|---|
| California | Yes | Yes |
| Massachusetts | Yes | Yes |
| New Jersey | Yes | Yes |
| Rhode Island | Yes | Yes |
| Vermont | No | No |
| Washington, D.C. | Yes | Yes |
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California
Most people in California are required to have health coverage that meets the state's minimum essential coverage requirements. Unless you have an exemption, like if you go three months or less without coverage, you will have to pay a penalty when you file your state tax return. The penalty for going uninsured for a full year is at least $900 per adult and $450 per dependent child under age 18. For a family of four (with two adults) going uninsured for a full year, the penalty is at least $2,700.
Massachusetts
In Massachusetts, tax penalties are set by how close your income is to the federal poverty level (FPL). For example, if you make one and a half times the FPL, you will be taxed $24 per month for each month you aren't covered. If you go all year uninsured, the penalty is $288. If you make more than three times the FPL, you'll be taxed $183 per month or $2,196 per year.
In Massachusetts, you are required by law to have what's called minimum credible coverage. But you can have up to three consecutive months without penalty. That means if you lose your coverage, you can avoid the tax penalty by getting coverage again within three months.
New Jersey
The penalty for being uninsured in New Jersey is called the Shared Responsibility Payment (SRP) and is based on your household income and family size. New Jersey requires its residents to have minimum essential health coverage, unless they can get an exemption.
Rhode Island
Tax penalties in Rhode Island are either $695 per adult and $347.50 per child, or 2.5% of your yearly household income, whichever is higher. All residents of Rhode Island are required to have health insurance with minimum essential coverage, unless they can get an exemption.
Vermont
Vermont's individual mandate is different from the other states. While you are required to report health insurance on your state taxes, there is no penalty if you're uninsured. So there are no legal or financial consequences for not having coverage.
Washington, D.C.
The penalty for going without health insurance in D.C. is either $745 per adult and $372.50 per child, or 2.5% of family income, whichever is greater. The Washington, D.C., mandate is officially called the Washington, D.C., Individual Taxpayer Health Insurance Responsibility Requirement. D.C. residents need to have health insurance with minimum essential coverage, unless they qualify for an exemption.
Consequences of not having health insurance
In California, Massachusetts, New Jersey, Rhode Island and Washington, D.C., there are tax penalties for not having health insurance.
But even if health insurance isn't legally required in your state, there are other consequences for not having health insurance. Your coverage helps pay for medical bills and prescription drugs, helps you avoid large debt and provides a cap on what you have to spend on medical care each year.
For example, a broken leg can cost nearly $8,000. If you do not have health insurance, you must pay the entire amount. If you have good health insurance, you may only have to cover 20% of the cost, or $1,600.
Health insurance can keep you from facing massive medical debts. A three-day hospital stay can cost more than $30,000 without insurance. Some cancer diagnoses can cost hundreds of thousands of dollars all told, which most people will struggle to pay off.
Many people who do not have health insurance avoid seeing a provider regularly, which can often lead to their problems getting worse. On top of that, the worse their problems are, the more they will cost down the road.
What to do if you don't have health insurance
The best way to get health insurance coverage is through your job, but there are other options as well.
Medicaid
If you have a low income, see if you qualify for Medicaid. Medicaid plans have little to no cost and offer medical, hospital and prescription coverage.
Medicare
When you turn 65, you automatically qualify for Medicare, which counts as health insurance in states where it is required. Medicare Part A is typically free once you turn 65, while you usually have to pay for other parts of Medicare.
Health exchange
HealthCare.gov or your state marketplace can have private health plans from companies like UnitedHealthcare, Aetna or Blue Cross Blue Shield (BCBS), although in many cases you can only sign up during open enrollment. Eighteen states and D.C. do not use HealthCare.gov.
Private plans
You can go directly to health insurance companies to get a plan. Most companies offer plans that qualify for the coverage needed. If you're concerned about the cost of a private plan, you can get a broker to help you find multiple options.
Why people go without health insurance
Roughly 7.5% of Americans, or about 26 million people, are without health insurance. And there are many potentials reasons, including:
- Plans offered through their employer don't have enough coverage.
- Plans are too expensive, or they don't want to spend the money.
- They are between jobs and don't have employer health insurance.
Although there is a penalty in some states for not having health insurance, some people might still choose to go without it if they think health insurance is too expensive. For example, in Massachusetts, a potential penalty for not having health insurance is $183 per month or $2,196 per year. If someone finds that they will pay more for their health insurance than for the penalty, it's possible someone may choose to pay the penalty instead.
Frequently asked questions
Do you have to have health insurance?
If you live in a state with an individual mandate, which includes California, Massachusetts, New Jersey, Rhode Island, Vermont and Washington, D.C., then you are typically required to have health insurance. However, Vermont has no penalty for being uninsured.
When is it OK not to have health insurance?
Although you do not technically need health insurance unless you live in a state that requires it with an individual mandate, it is a very good idea to have health insurance. That way you are covered in case of an injury or illness and protected financially.
What if I have a health emergency but no health insurance?
If you show up to the emergency room, you will be treated whether you have health insurance or not. However, you will still have to pay, and your bill will likely be high.
Will insurance cover all my medical expenses?
Health insurance kicks in after you meet your deductible, which is the amount you'll pay out of pocket before costs are covered. After that, your insurance will cover much of the bill, but you'll likely still have to pay a part of the overall cost.
How much does health insurance cost per month?
Health insurance, on average, costs $584 per month for a Silver plan. However, costs vary by state, and subsidies can drop your rates down to $0 per month if you qualify.
Methodology
Information on requirements, tax penalties and exemptions are from the California, Massachusetts, New Jersey, Rhode Island, Vermont and Washington, D.C., government websites.
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