Visit an updated version of this article about health insurance penalties in 2019 and beyond.


The Affordable Care Act’s (ACA’s) individual mandate imposed a penalty for not having health insurance upon many Americans, who don’t qualify for a hardship exemption. This part of health reform has generated a considerable amount of debate between opponents and proponents of the ACA. In any case, CNBC reports on recent legislation that has lifted this part of the bill beginning in 2019; however, the penalty associated with the individual mandate remains in effect for 2018. While most people would prefer to avoid a lapse in coverage, they would also like to avoid having to pay a penalty for not having health insurance.

What is the individual mandate?

The Obamacare individual mandate is a requirement by law, for individuals to obtain health insurance of a certain standard, or else face a fee. The fee associated with the individual mandate is often called the individual shred responsibility payment. Although the individual mandate is the actual law, you may hear people refer to the fee associated with this law as “the individual mandate”. You may also hear the fee called, a “penalty” or “fine” associated with the individual mandate.
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Who could pay a penalty for not having health insurance?

According to the IRS, tax filers may have to pay a fee if they, spouses, and/or dependents lack ACA-qualified medical insurance for more than three months in the tax year. This penalty gets added when its time to file federal income taxes.
ACA-compliant plans that will not generate penalties typically include individual major medical insurance from the Marketplace or a broker, job-sponsored group health insurance, and government health plans. Plans that don’t provide essential health benefits and meet other criteria will not help people avoid the individual mandate penalty for not having health insurance.
The government will make exceptions for lapses in medical coverage for any time less than three months, and for certain other hardship exemptions. These exemptions include but are not limited to:

• Losing a home or suffering substantial damage to a home
• Having high medical expenses or a death in the family
• Bankruptcies and certain other financial hardships

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What is the penalty for not having health insurance under the individual mandate?

People who do have to pay a penalty for not having insurance may have to pay the greater of:

• Up to 2.5 percent of annual income, with a maximum of the annual premium for an average Bronze plan
• Up to $695 for each adult and $347 for each child up to 18 years old, with a maximum of $2,085 for each household

Note that the government will prorate these penalties for people who do have health insurance for some months during the year. For instance, an individual without a qualified medical plan for five months might have to pay 5/12 of the total fee as their fine for being uninsured.

Obamacare alternatives for health insurance

Some people may encounter circumstances when they cannot obtain ACA-qualified major medical plans for a variety of reasons. These could include losing a job and having to wait for a new group medical plan, long-term stays in the country by non-residents, and simply finding premiums unaffordable due to an income loss. Some people might also simply need to wait for the annual ACA enrollment period in the late fall and not qualify for a Special Enrollment Period.
Even though these families or individuals may or may not need to pay the tax penalty associated with the individual mandate, they may still wish to find coverage to protect themselves from medical bills and to ensure access to quality providers. Individual mandate aside, your health and your family’s health should still be a major concern, and it’s a good idea to have some type of coverage (even if it doesn’t protect against the individual mandate).
Some affordable alternatives to ACA-qualified major medical insurance may include:

• Short-term medical plans: Typically, these plans last for a few months but may be renewable.
• US visitor insurance: Similar to short-term medical plans, these health insurance policies are meant to help non-nationals protect themselves from medical costs.
• Accident and critical illness insurance: These types of plans generally make cash payments to plan members who suffer from a covered incident.
• Dental, vision, and prescription plans: These may include insurance or discount plans that help members save money on a variety of health-related costs.

People may want to enroll in a qualified medical plan to avoid a penalty for not having health insurance; however, the main motivation to buy medical coverage is to protect finances and family members against expensive medical bills.

How to find the right health insurance

At eHealth, it’s easy to compare a variety of different kinds of health insurance plans with a simple online search. This includes Obamacare plans, Obamacare alternatives, group plans for businesses, and more.