The health insurance mandate still exists in federal law, but the penalty for going without coverage has been $0 since 2019, so the IRS will not fine you on your federal return for being uninsured. The real financial risk sits in three places: a handful of states that run their own mandates with active penalties, the employer side of the law, and the Marketplace subsidy rules that can quietly cost you far more than any mandate fine.
The Federal Rule Is Still on the Books
Federal law continues to say that every “applicable individual” must maintain minimum essential coverage for each month of the year. That requirement sits in 26 U.S.C. § 5000A, enacted as part of the Affordable Care Act in 2010.1Office of the Law Revision Counsel. 26 USC 5000A – Requirement to Maintain Minimum Essential Coverage Originally, people who went uncovered owed a “shared responsibility payment” calculated as either a percentage of income or a flat dollar amount per person, whichever was higher.
The Tax Cuts and Jobs Act of 2017 changed the math without repealing the statute. Starting with the 2019 tax year, the flat dollar amount dropped to $0 and the income percentage dropped to zero.1Office of the Law Revision Counsel. 26 USC 5000A – Requirement to Maintain Minimum Essential Coverage The rule still exists, but with no dollar figure attached, the IRS has nothing to collect. Federal tax forms no longer include the checkbox where taxpayers once confirmed full-year coverage, and you do not need to file the old Form 8965 or make any shared responsibility payment on your federal return.2Internal Revenue Service. Gathering Your Health Coverage Documentation for the Tax Filing Season
States That Still Charge You for Going Uninsured
When the federal penalty zeroed out, several states built their own. California, Massachusetts, New Jersey, Rhode Island, and the District of Columbia currently enforce individual mandates backed by financial penalties. Vermont also requires residents to carry coverage but imposes no penalty for non-compliance. If you live in one of these jurisdictions, going without coverage will cost you at tax time no matter what the federal rule does.
These penalties are collected through the state income tax return, not by the IRS. The exact amount depends on where you live. Some states calculate it as the greater of a flat per-person amount or a percentage of household income, the same structure the original federal penalty used. A family of four that goes an entire year without coverage can face a penalty of several thousand dollars.
In these states, your tax return will include a schedule or form where you report your coverage status month by month and either calculate the penalty or claim an exemption. Insurers also report coverage data directly to state tax agencies, and discrepancies between what you report and what they report can trigger notices or additional review.
Exemptions That Can Get You Out of a Penalty
Even in states with active penalties, not everyone owes. Exemptions exist for people whose circumstances make traditional coverage impractical or unaffordable. The categories below reflect common exemptions recognized at the federal level and in most states with mandates, though the specific qualifying criteria differ by jurisdiction.
Affordability
If the cheapest coverage available to you would cost more than a set percentage of your household income, you can claim an affordability exemption. The federal standard, still used for Marketplace catastrophic-plan eligibility, has historically sat at around 8% of income, and state mandates may set their own percentages.3HealthCare.gov. Health Coverage Exemptions, Forms, and How to Apply People whose income falls below the tax-filing threshold are generally exempt as well.
Short Coverage Gaps
A gap of three consecutive months or less without coverage typically does not trigger a penalty. That covers situations like switching jobs or waiting for new employer coverage to start. If the gap stretches beyond three months, the penalty applies for every uncovered month, not just the ones past the three-month mark.
Hardship
A range of life events qualify as hardships: homelessness, eviction or foreclosure, domestic violence, the death of a close family member, a natural disaster that damaged your property, and bankruptcy. Substantial unpaid medical debt and unexpected caregiving costs also qualify.3HealthCare.gov. Health Coverage Exemptions, Forms, and How to Apply In states with mandates, you typically claim hardship exemptions on your state tax return or through the state marketplace, with documentation.
Other Categories
Members of federally recognized Indian tribes, incarcerated individuals, and members of recognized religious sects that have traditionally opposed accepting insurance benefits are exempt. Some states also treat health care sharing ministry membership as satisfying the coverage requirement, but not all do. A ministry that qualifies in one state may not qualify in another.
The Subsidy Trap That Costs More Than Any Penalty
The piece of this that catches people off guard, and actually costs them money, has nothing to do with the mandate itself. If you bought coverage through the Marketplace and received advance premium tax credits to lower your monthly premiums, you must file a federal tax return and attach Form 8962 to reconcile those advance payments, even if your income is otherwise too low to require filing.4Internal Revenue Service. Questions and Answers on the Premium Tax Credit
Reconciliation compares the advance credits you received during the year against the credit you actually qualify for based on your final income. If your income was lower than projected, you may get additional credit back as a refund. If your income was higher, you may owe some of the advance credit back.5eCFR. 26 CFR 1.36B-4 – Reconciling the Premium Tax Credit With Advance Credit Payments
The real penalty for skipping this step is not a fine. If you do not file a return with Form 8962, you become ineligible for advance premium tax credits in future years, which means paying the full unsubsidized premium each month until you catch up on your filings.4Internal Revenue Service. Questions and Answers on the Premium Tax Credit For someone whose monthly subsidy was several hundred dollars, losing that credit is a far bigger hit than any state mandate penalty. Form 1095-A, issued by the Marketplace, carries the numbers you need to complete Form 8962, so wait for it before filing.6HealthCare.gov. How to Use Form 1095-A, Health Insurance Marketplace Statement
What Counts as Qualifying Coverage
Not every health-related product satisfies the mandate. The standard is “minimum essential coverage,” and the qualifying list is broader than many people realize:7HealthCare.gov. Qualifying Health Coverage
- Any plan purchased through the federal or a state Health Insurance Marketplace.
- Employer-sponsored plans, including COBRA continuation coverage.8Centers for Medicare and Medicaid Services. Minimum Essential Coverage
- Medicare Part A, Medicaid (except limited-benefit versions), CHIP, TRICARE, and certain veterans’ health coverage.
- Coverage under a parent’s plan, most individual plans bought outside the Marketplace that meet qualified health plan standards, Peace Corps volunteer coverage, and Refugee Medical Assistance.
Short-term health plans and health care sharing ministries generally do not qualify as minimum essential coverage. If you rely on one of those, check your state’s rules before assuming you are in compliance.
If You Have Employees
The individual rule gets most of the attention, but there is a separate mandate aimed at employers that carries real federal penalties. Under 26 U.S.C. § 4980H, any business that averaged at least 50 full-time employees (including full-time equivalents) during the prior calendar year must offer affordable health coverage to its full-time workers or face penalties.9Office of the Law Revision Counsel. 26 USC 4980H – Shared Responsibility for Employers Regarding Health Coverage Full-time means at least 30 hours of service per week or 130 hours in a calendar month.10Internal Revenue Service. Determining if an Employer Is an Applicable Large Employer Employers below that threshold have no obligation.
For 2026, an employer that does not offer minimum essential coverage to at least 95% of its full-time employees owes $3,340 per full-time employee for the year (minus the first 30) if at least one employee gets a subsidized Marketplace plan. An employer that offers coverage but fails the affordability or minimum-value tests owes $5,010 for each full-time employee who enrolls in a subsidized Marketplace plan instead. Coverage counts as affordable for 2026 if the employee’s share of the premium for the cheapest self-only option does not exceed 9.96% of household income.11Internal Revenue Service. Revenue Procedure 2025-25 These penalties are actively enforced.
When You Can Actually Buy Coverage
Marketplace coverage is not available year-round. Open enrollment for the federal Marketplace typically runs from November 1 through January 15.12HealthCare.gov. When Can You Get Health Insurance Enroll by December 15 and coverage starts January 1; enroll between December 16 and January 15 and it starts February 1. State-based marketplaces may set slightly different windows.
Outside of open enrollment, you can only sign up if you qualify for a special enrollment period triggered by a life event such as losing existing coverage, getting married, having a child, or moving. Employer-sponsored coverage follows its own schedule, usually tied to your hire date or an annual open-enrollment window set by the employer. Miss all of these windows in a state with an active mandate and you will owe the penalty for every uncovered month unless you qualify for an exemption.