What Is the Penalty For Not Having Insurance?

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Penalties for not having insurance vary based on the type of insurance and a person's individual situation. Health insurance penalties are based on a person's income, though there are a number of exemptions available. Car insurance penalties vary based on a person's state of residency.

How much you are penalized for not having insurance depends on the specific kind of insurance. After all, there is no penalty for failing to have home or renters insurance unless you happen to live somewhere that specifically requires it. If you are asking about health insurance or car insurance though, you certainly could be penalized for going without, depending on your specific circumstances.

TL;DR (Too Long; Didn't Read)

Whether you will be penalized for not having insurance depends on the type of insurance and your specific situation.

What Is the Penalty for Not Having Health Insurance?

In December of 2017, the government signed into law a new tax bill, known as the Tax Cuts and Jobs Act, that eliminates the individual mandate penalizing those who do not buy insurance. However, this law does not take effect until 2019, which means for the 2017 and 2018 tax years, Americans are still required to have insurance or pay a fine for each month they go without it (although a person can go up to three consecutive months without insurance before facing a fine). The fine varies based on your yearly household income and the cost of plans in the Healthcare.gov Marketplace.

Those facing the fine are required to pay 2.5 percent of their yearly income with a maximum penalty equal to the average national price for a Bronze plan in the Marketplace, or $695 per adult and $347.50 per child under 18 with a family maximum of $2,085. The actual penalty a person must pay is the higher of the two options. The fine is prorated monthly for those who had their insurance lapse for more than three consecutive months, but less than a full year. The fee is processed on the individual's tax return for the prior year, so the last of these penalties will be due in April of 2019.

What Is a Hardship Exemption?

Not everyone who goes without health insurance is required to pay the penalty. There are many hardship exemptions for those who were unable to pay for insurance for all or part of the year. Those who are not required to file a tax return because their income is below the filing threshold are automatically exempted from the penalty and do not have to file taxes solely to report their insurance coverage, though they do need to file for an exemption if they choose to file a return.

If coverage is considered unaffordable because an employer-sponsored or bronze-level health plan is higher than a certain percentage of your household income, you may get an exemption. The specific percentage of household income defined as unaffordable varies based on an individual's income and tax situations. For more information, use the Healthcare.gov Exemptions Tool.

Other exemptions include:

  • Living abroad or not being a U.S. citizen
  • Living in a state that did not expand Medicaid while earning an income below 138 percent of the poverty line (which would have qualified you for Medicaid through the expansion)
  • Belonging to a healthcare-sharing ministry, certain religious sects or a federally-recognized Native American tribe 
  • Being incarcerated 
  • Experiencing general hardships such as being homeless, getting evicted, enduring home foreclosure, being a victim of domestic violence or suffering from the death of a close family member

Can You Get a Fine for Not Having Car Insurance?

Most states require drivers to have car insurance. New Hampshire is an exception, but drivers without insurance are still required to prove they are financially able to cover damages in the case of an at-fault accident. Many states also offer drivers the option to purchase a bond rather than insurance, which can be used in case the driver is at fault in a car accident. These bonds are very expensive though, ranging anywhere from $10,000 in Massachusetts to $160,000 in Utah.

In states where car insurance or bonds are mandatory, the fine for driving without coverage varies greatly – from $30 in Florida up to $5,000 in West Virginia. Fines are not the only penalty for driving without auto insurance, though. Depending on the state, drivers without insurance could also face jail time, license suspensions, vehicle registration suspensions, confiscation of their license plates, vehicle impoundments, points on their driving record or they may have to use the much more expensive SR-22 insurance, also called "high risk insurance."

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About the Author

Jill Harness is a legal blog writer with experience creating SEO-based content for attorneys in a variety of practice areas. Her work has earned the #24 spot on Feedspot's list of the top 75 criminal law blogs. You can find out more about her experience and how to contact her through her website, www.jillharness.com.