Think You’re Safe From The Health Insurance Tax? Think Again!

Previously, if Americans did not have health insurance, they would face a penalty, or tax, called the individual mandate penalty. Thanks to the Tax Cuts and Jobs Act, the penalty no longer exists. However, some states still have the ability to penalize people for not having health insurance. 

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Although the individual mandate is gone, some states will tax you for not having health insurance.

Massachusetts, New Jersey, and Washington D.C. will hit you with a penalty for not having health insurance. Other states (California, Rhode Island, and Vermont) are joining the bandwagon and creating a health insurance coverage mandate for 2020. So if residents do not have health insurance in 2020, then they will pay a penalty in 2021.


States will allow exemptions, thankfully, to help certain people avoid the penalty. The circumstances include low income that falls below the state tax filing threshold. 

How Much Is The Penalty?

The penalty ranges in different states. They are:

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If you live in one of the states that impose a health insurance tax, be prepared for the penalty if you do not have health insurance.
  • California- A flat amount of $695 per adult or $347.50 for each child. California can charge you 2.5% of gross income in excess of the state’s filing threshold, whichever is higher.
  • Massachusetts- The penalty is based on the household income, and can range from $264 per year to $1.524 per year. Individuals with income at or below $18,210 ($37,650 for a family of four) aren’t penalized
  • Washington D.C.- The penalty is $695 per adult, or $347.50 per child. Washington can also assess a penalty of 2.5% of household income, whichever is higher.
  • New Jersey- The penalty is based on household income as well. Individual taxpayers without coverage could be on the hook for at least $695, and up to a maximum of $3,012.
  • Vermont– Vermont is one of the states jumping on the bandwagon, so they have not determined the penalties yet.
  • Rhode Island- The penalty is a flat tax of $695 per adult and $347.50 per child, or 2.5% of income above state filing threshold, whichever is greater.

Getting Ready

When the time comes to file your tax paperwork, make sure you have all the appropriate forms handy that prove you had health insurance coverage. There should be a number of forms in the mail coming to taxpayers (Forms 1095-A, 1095-B and 1095-C) that detail whether you and your family members had coverage throughout the year.

Luckily only a few states are imposing the tax penalty for not having health insurance, but for those who do live in these states, be prepared. Know that there is a penalty so you are not blindsided, and if you opt out of insurance, then be prepared financially to pay the penalties.

About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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