What Happens If You Don't Have Health Insurance? State Penalties

The Federal Individual Mandate: What Changed

When the Affordable Care Act was signed into law in 2010, it included a federal individual mandate requiring most Americans to maintain qualifying health insurance or pay a tax penalty. The purpose was straightforward: by bringing healthy people into the insurance pool alongside those with higher healthcare costs, premiums would stay more affordable for everyone. For several years, the penalty was substantial, reaching as high as $695 per adult or 2.5% of household income above the filing threshold, whichever was greater.

That changed with the Tax Cuts and Jobs Act of 2017. While the law did not repeal the individual mandate itself, it reduced the federal penalty to $0 beginning with the 2019 tax year. This means that at the federal level, there is no financial consequence for going without health insurance in 2026. The IRS will not assess a penalty on your federal tax return if you are uninsured. However, that is only half the story. Several states have stepped in to create their own mandates with real financial penalties that affect millions of Americans. If you live in one of these states, being uninsured can cost you hundreds or even thousands of dollars when you file your state taxes. Understanding which states impose penalties, how much they charge, and what exemptions are available is essential to making an informed decision about your health insurance coverage.

States with Health Insurance Penalties in 2026

As of 2026, five jurisdictions actively enforce financial penalties for residents who do not maintain qualifying health insurance: California, Massachusetts, New Jersey, Rhode Island, and the District of Columbia. Vermont has an individual mandate with a reporting requirement but does not impose a financial penalty. Each of these states established its own mandate after the federal penalty was zeroed out, recognizing that the mandate plays a critical role in keeping insurance markets stable and premiums affordable.

California

California enacted its individual mandate effective January 1, 2020, through the California Health Benefits Exchange. The penalty is assessed by the Franchise Tax Board when you file your state income tax return. For the 2026 tax year, the penalty is the greater of:

• 2.5% of gross household income above the state tax filing threshold, or
• A flat per-person amount of approximately $950 per uninsured adult and $475 per uninsured child under 18, capped at a family maximum of roughly $2,850.

The penalty is prorated monthly. If you were uninsured for only three months, you would owe 3/12 of the annual penalty. California uses the revenue generated from the mandate to fund additional state premium subsidies through Covered California, supplementing the federal premium tax credits to make marketplace plans more affordable for middle-income residents.

Massachusetts

Massachusetts was the pioneer of individual health insurance mandates, enacting its requirement in 2006 under then-Governor Mitt Romney. The state mandate served as the model for the ACA's federal mandate and has remained continuously in effect. Massachusetts residents must have minimum creditable coverage (MCC), which is a standard that in some respects exceeds the ACA's minimum essential coverage requirements.

The Massachusetts penalty is calculated using a schedule published annually by the Department of Revenue based on your age, income, and the number of months without coverage. For 2026, penalties can reach approximately $182 per month for individuals, depending on income bracket, meaning a full year without coverage could cost over $2,000. The penalty is reported on Schedule HC when filing your Massachusetts state tax return. Residents with incomes below 150% of the federal poverty level are generally exempt.

New Jersey

New Jersey implemented its Health Insurance Market Preservation Act effective January 1, 2019, making it one of the first states to adopt a mandate after the federal penalty was eliminated. The New Jersey penalty closely mirrors the original federal structure. For the 2026 tax year, the penalty is the greater of:

• 2.5% of household income above the filing threshold, or
• A flat per-person amount of approximately $695 per uninsured adult and $347.50 per uninsured child, up to a family maximum of roughly $2,085.

The penalty is assessed through the New Jersey Division of Taxation and is reported on your state income tax return. Like California, the penalty is prorated monthly for partial-year gaps in coverage. New Jersey uses mandate revenue to fund its state reinsurance program, which has helped reduce individual market premiums.

Rhode Island

Rhode Island enacted its individual mandate effective January 1, 2020. The structure is similar to the original federal penalty. For 2026, the penalty is the greater of 2.5% of household income above the filing threshold or a flat per-person amount of approximately $695 per uninsured adult and $347.50 per child, up to a family maximum of roughly $2,085. The penalty is assessed on the Rhode Island state tax return and is administered by the Rhode Island Division of Taxation. Revenue supports the state's health insurance market stability efforts.

Washington, D.C.

The District of Columbia enacted its individual mandate effective January 1, 2019, through the DC Health Benefit Exchange Authority. The DC penalty also follows the original federal structure. For 2026, it is the greater of 2.5% of household income above the filing threshold or a flat per-person amount of approximately $695 per uninsured adult and $347.50 per uninsured child, capped at a family maximum of roughly $2,085. The penalty is assessed and collected through the DC income tax return filed with the Office of Tax and Revenue.

Vermont (Reporting Requirement Only)

Vermont has an individual mandate that requires residents to report their health insurance status when filing state taxes. However, Vermont does not impose a financial penalty for being uninsured. The reporting requirement helps the state track coverage rates and gather data to inform health policy decisions. If you live in Vermont, you must disclose whether you had coverage but will not be charged a penalty if you did not.

What Counts as Qualifying Health Coverage?

To avoid a state penalty, you must have what is known as minimum essential coverage (MEC) for each month of the tax year. The types of coverage that qualify are broadly consistent across all mandate states and include the following:

• Employer-sponsored health insurance (including COBRA continuation coverage)
• ACA marketplace plans purchased through HealthCare.gov or a state exchange
• Medicare Part A or Medicare Advantage
• Medicaid and the Children's Health Insurance Program (CHIP)
• TRICARE and other military coverage
• Veterans Affairs (VA) health care programs
• Peace Corps volunteer coverage
• Individual market plans that meet ACA standards purchased directly from an insurer

Plans that generally do not count as qualifying coverage include short-term health insurance plans, health care sharing ministries, accident-only or critical illness policies, dental-only and vision-only plans, and discount health programs. If your only coverage falls into one of these categories, you would still be considered uninsured under your state's mandate.

Exemptions from State Health Insurance Penalties

Every state with an individual mandate provides exemptions for residents who face specific circumstances that make obtaining coverage impractical or unaffordable. While the exact criteria vary by state, the following exemptions are widely available across mandate states:

• Income below filing threshold: If your income is low enough that you are not required to file a state tax return, you are generally exempt from the penalty.
• Short coverage gap: A gap of fewer than three consecutive months during the tax year typically does not trigger a penalty. This gives you time to transition between plans without financial consequences.
• Affordability hardship: If the lowest-cost qualifying plan available to you exceeds approximately 8.17% of your household income (the threshold varies by state and year), you may be exempt from the penalty.
• General hardship: Events such as homelessness, domestic violence, eviction, bankruptcy, death of a close family member, or natural disaster may qualify you for a hardship exemption.
• Religious conscience: Members of recognized religious sects with established objections to insurance may be exempt.
• Incarceration: Individuals who are incarcerated are exempt for the months they are in custody.
• Tribal membership: Members of federally recognized Native American tribes are exempt from the penalty.
• Not lawfully present: Undocumented immigrants are not subject to the mandate or the penalty.

In most states, you claim your exemption directly on your state tax return. Massachusetts requires you to complete Schedule HC with specific exemption codes. California handles most exemptions through the Franchise Tax Board during filing. Check your state's tax authority website for the specific forms and codes required.

How State Penalties Are Assessed and Collected

Unlike the original federal penalty, which was collected by the IRS through your federal tax return, state penalties are assessed and collected by each state's tax authority through the state income tax filing process. The mechanics work the same across all penalty states: insurance carriers and employers report coverage data to the state, and you are asked to verify your coverage status when you file your state return.

If you had qualifying coverage for the entire year, you simply indicate that on your return and no penalty is assessed. If you had a gap in coverage and do not qualify for an exemption, the penalty is calculated based on the number of uninsured months, your household income, and the number of uninsured household members. The penalty amount is then added to your state tax liability, meaning it reduces your refund or increases the amount you owe.

It is important to understand that you cannot simply ignore a state penalty. State tax authorities have the same collection tools available for mandate penalties as they do for any other state tax debt, including wage garnishment, bank levies, and interception of future state tax refunds. Filing your state return accurately and claiming any applicable exemptions is the best way to manage your obligation.

Risks of Going Without Health Insurance

Beyond the financial penalty in mandate states, going without health insurance exposes you to significant risks that can affect your financial health for years. Understanding these risks is just as important as understanding the penalties themselves.

Medical debt is the leading cause of personal bankruptcy in the United States. A single emergency room visit can cost $2,000 to $5,000 or more, a broken bone can cost $7,500 to $35,000 depending on severity and treatment, and a three-day hospital stay averages over $30,000. Without insurance, you are responsible for the full cost. Even with hospital charity care programs and negotiated payment plans, an unexpected medical event can create a financial burden that takes years to resolve.

Uninsured individuals are also less likely to receive preventive care, screenings, and early treatment for chronic conditions. Delayed care frequently leads to more serious and more expensive health problems down the road. Studies consistently show that uninsured adults are more likely to be diagnosed with late-stage cancer, more likely to have uncontrolled chronic conditions like diabetes and hypertension, and more likely to experience preventable hospitalizations.

Additionally, if you are uninsured, you cannot enroll in a marketplace plan until the next open enrollment period unless you experience a qualifying life event. Getting sick is not a qualifying event. This means you could face months without coverage and without any way to obtain it, no matter how much health insurance costs.

Options If You Cannot Afford Health Insurance

If the cost of health insurance feels out of reach, there are several avenues worth exploring before resigning yourself to being uninsured and potentially facing a state penalty. Many people who believe they cannot afford coverage are actually eligible for substantial financial assistance.

1. Check your eligibility for premium tax credits. Under the enhanced subsidies extended through the Inflation Reduction Act, many consumers can find marketplace plans with monthly premiums of $0 to $50 after credits are applied. Even individuals earning above 400% of the federal poverty level may qualify if their benchmark premium exceeds 8.5% of household income. Use the marketplace application at HealthCare.gov or your state exchange to see your estimated credit. Learn more about ACA income limits and subsidy eligibility.
2. Apply for Medicaid. In the 40 states plus D.C. that have expanded Medicaid under the ACA, adults with household incomes up to 138% of the federal poverty level (approximately $20,783 for an individual in 2026) can qualify for free or very low-cost comprehensive coverage. Medicaid enrollment is available year-round, so you do not need to wait for open enrollment.
3. Look into CHIP for children. If you have children who are uninsured, the Children's Health Insurance Program provides free or low-cost coverage for kids in families with incomes too high for Medicaid but too low to comfortably afford private insurance. Income limits vary by state but often extend to 200% FPL or higher.
4. Consider a Catastrophic plan. If you are under 30, or if you qualify for a hardship or affordability exemption, you may be eligible for a Catastrophic health plan through the marketplace. These plans have very low monthly premiums, cover three primary care visits per year before the deductible, and provide a safety net against worst-case scenarios. Catastrophic plans count as qualifying coverage in all mandate states.
5. Explore state-specific programs. Some states with mandates offer additional premium assistance beyond federal subsidies. California, for example, uses revenue from its mandate penalty to fund supplemental state subsidies for middle-income residents purchasing coverage through Covered California. Check your state exchange website for programs specific to your area.
6. Claim an exemption if eligible. If you explore all options and truly cannot afford coverage, make sure to claim the appropriate exemption on your state tax return. The affordability exemption and hardship exemptions exist specifically for situations where coverage is genuinely out of reach.

State-by-State Penalty Summary for 2026

The following summary provides a quick reference for the 2026 penalty structure in each mandate jurisdiction. All amounts are approximate and may be adjusted for inflation by each state's tax authority.

• California: Greater of 2.5% of income or ~$950/adult, ~$475/child (max ~$2,850). Collected by the Franchise Tax Board.
• Massachusetts: Up to ~$182/month based on income and age (max ~$2,184/year). Collected via Schedule HC on state tax return.
• New Jersey: Greater of 2.5% of income or ~$695/adult, ~$347.50/child (max ~$2,085). Collected by the Division of Taxation.
• Rhode Island: Greater of 2.5% of income or ~$695/adult, ~$347.50/child (max ~$2,085). Collected by the Division of Taxation.
• Washington, D.C.: Greater of 2.5% of income or ~$695/adult, ~$347.50/child (max ~$2,085). Collected by the Office of Tax and Revenue.
• Vermont: Reporting requirement only. No financial penalty.
• All other states: No state mandate or penalty. Federal penalty is $0.

The Bottom Line

While the federal health insurance penalty has been $0 since 2019, millions of Americans living in California, Massachusetts, New Jersey, Rhode Island, and Washington, D.C. still face real financial consequences for going without qualifying health coverage. Penalties can reach hundreds or even thousands of dollars per household and are enforced through state tax returns with the same collection power as any other tax debt.

But penalties aside, going without health insurance is a gamble that can have far greater financial consequences than any mandate penalty. A single unexpected medical event can generate tens of thousands of dollars in bills. The good news is that between premium tax credits, Medicaid expansion, CHIP, and state-specific subsidies, most people who think they cannot afford coverage actually have affordable options available to them.

If you are currently uninsured, the most important step you can take is to visit your state exchange or HealthCare.gov during open enrollment and complete an application. You may be surprised by how affordable coverage can be once subsidies are applied. If you live in a mandate state and genuinely cannot afford coverage, be sure to claim the appropriate exemption on your state tax return so you are not penalized for a situation beyond your control.