The penalty for not carrying health insurance is quite debatable. Before 2018, an individual mandate known as the ‘shared responsibility provision’ in the Affordable Care Act imposed a penalty on those without health insurance. This was a necessity because for health insurance to work, there must be a good balance between low-cost enrollees and high-cost enrollees. If only high-cost enrollees keep seeking health insurance, the insurance system won’t work out well for everyone. Therefore, the penalty was supposed to make it necessary for everyone to carry health insurance.
Shared Responsibility Provision
This provision required you to have minimum essential coverage. Only an exemption from the shared responsibility provision could save you from being penalized for not carrying health insurance. In 2018 tables turned, and under the terms of Tax Cuts and Jobs Acts (TCJA) 2017, the tax penalty was suspended. This is where it gets tricky; the individual shared responsibility provision is still in effect. Nonetheless, there’s no penalty to enforce it.
Disputes Post TCJA,2017
Apparently, a part of the Affordable Care Act has been rendered powerless by the Tax Cuts and Job Acts 2017. A court case arose, where 20 states in the United States demanded that the ACA should be overturned. The reasons were far-fetched; if the ACA didn’t have a penalty to enforce it, the constitutionality of all the provisions in the ACA was questionable. Since 2018 the case has fluctuated between courts, with lower courts appealing to higher courts for a verdict. The appeal court came to terms with a lower court about the unconstitutionality of the ACA. Nevertheless, it asked the lower court to conduct a review and determine the areas of the ACA that need to be overturned. Unfortunately, a ruling from the Supreme court was expected in the spring of 2021 until the change in government halted the proceedings.
The Penalty for Not Carrying Health Insurance in CA
Despite the conflicts and disagreements regarding the penalty for not carrying health insurance, California has introduced a new state mandate for individual health care. Under the new state law, failure to obtain minimal coverage will result in penalties of:
- $695 per adult and $347.50 per child (in a household)
- 5% of the total household income
(whichever is higher)
Can I Be Exempt from Paying the Penalty for Not Having Health Insurance?
There are a few unique circumstances wherein you can avoid being penalized under the new state health insurance policy. These include:
- Non-US citizens or undocumented residents
- Individuals under incarceration
- US citizens living abroad during a tax year
- Those facing financial difficulties or have religious objections
- Members of federally recognized American Indian Tribes
Quality health insurance plans can be availed at affordable rates. Besides, as a California resident with low or middle range income, you may even qualify for the new subsidy program in which taxpayers making 400%-600% of federal poverty levels are extended premium tax credits.
At Young Insurance, our team of professionals can mediate and settle your health insurance concerns. Contact us today for all of your insurance needs in Burbank and neighboring cities in California.