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What happens if I don’t buy ACA-compliant health insurance?

Author: Louise Norris | Date Posted: September 18, 2025

Q. What happens if I don't buy ACA-compliant health insurance?

A. It depends on where you live and what medical care you end up needing during the year. But it's also important to understand that if you don't buy ACA-compliant health insurance, you're potentially missing out on the financial assistance that's available to most Marketplace enrollees.

Most Marketplace enrollees qualify for premium subsidies.¹ Those subsidies are larger and more widely available through at least the end of 2025, due to the subsidy enhancements in the American Rescue Plan and Inflation Reduction Act. If Congress doesn't extend the subsidy enhancements, subsidies will shrink in 2026, and some enrollees will lose their subsidies altogether.

But even before those subsidy enhancements took effect in 2021, most Marketplace enrollees qualified for subsidies.² The opportunity to qualify for subsidies is lost, however, if you don't shop for coverage in your state's health insurance Marketplace (where all of the available plans are ACA-compliant).

If I don't buy an ACA-compliant plan, will I have to pay a penalty?

The Affordable Care Act's individual mandate penalty was reduced to $0 as of 2019, so there is no longer a federal penalty for not having minimum essential health coverage.

But unless you qualify for an exemption, there is a penalty for being without minimum essential coverage if you live in California, Rhode Island, Massachusetts, New Jersey, or the District of Columbia. You don't necessarily need ACA-compliant coverage to avoid the penalty in those states, and some types of minimum essential coverage aren't ACA-compliant (for example, grandmothered and grandfathered health plans are not fully ACA-compliant, and yet they count as minimum essential coverage). But an ACA-compliant plan is going to give you the most robust coverage.

If my plan is not ACA-compliant, how will my benefits differ?

All ACA-compliant plans in the individual and small group markets are required to cover the ACA's essential health benefits without any caps on the total amount the plan will spend on your care. So they'll provide a solid safety net if you end up needing significant medical care (although ACA-compliant large group plans and self-insured plans are not required to cover the essential health benefits, most do so voluntarily to attract and retain employees). And all ACA-compliant plans are required to cover pre-existing conditions without any waiting periods.

But if you buy a plan that's not ACA-compliant, the insurer will be likely to use medical underwriting to adjust the premiums or the coverage based on your medical history, and the plan won't have to cover the essential health benefits.

What health insurance plans are not considered ACA-compliant?

If you're purchasing your own coverage, there is a wide range of health plans that aren't required to comply with the ACA's rules. These include:

short-term health insurance (new policies limited to no more than four months total duration as of September 2024, although the Trump administration announced in August 2025 that this limit would no longer be enforced federally, so enforcement is now up to the states)³
Farm Bureau plans (not considered insurance, so exempt from state and federal insurance rules) in Iowa, Indiana, Tennessee, Kansas, South Dakota, Texas, and Nebraska⁴
travel insurance
accident supplements
limited benefit plans
fixed indemnity plans
health care sharing ministry plans (not considered insurance)
other supplemental or limited coverage.

Some of these plans are intended to supplement (but not replace) major medical coverage, while others are designed to be a less robust replacement for major medical coverage.

As long as you're not in a state that has a penalty for people who go without minimum essential coverage, you're free to purchase a plan that's not compliant with the ACA, and you won't be penalized for doing so. But your coverage won't be anywhere near as solid as it would be under an ACA-compliant plan.

If you stay healthy, you'll be fine.

But if you end up needing extensive medical care, your non-ACA-compliant plan could leave you on the hook for substantial medical bills. And if you buy coverage that's specifically exempt from state insurance regulation, such as a medically underwritten Farm Bureau plan or a health care sharing ministry plan, you won't be able to turn to your state insurance department for assistance if you run into trouble with your plan.

Is a grandmothered or grandfathered plan ACA-compliant?

If you've got coverage under a pre-ACA plan (a grandmothered or grandfathered plan), it's likely not compliant with the ACA. But it is considered minimum essential coverage – so it will fulfill a state-based individual mandate and you won't be subject to a penalty.

How can I choose the best health plan for me?

NEW: How to choose the best health insurance for your needs.

It's in your best interest, however, to make sure you carefully compare it with the ACA-compliant plans that are available for purchase during open enrollment or when your existing plan is up for renewal. And even if you looked a few years ago and weren't eligible for premium subsidies, you may be subsidy-eligible now.

That could be the case even if the federal subsidy enhancements are allowed to expire in 2026, simply due to increases in the federal poverty level (FPL) over time. For 2014 coverage, a family of four in the continental U.S. could only earn up to $94,200 to be subsidy-eligible (that limit was set at 400% of the prior year's FPL under the ACA). The 400% of FPL limit was eliminated as part of the American Rescue Plan's subsidy enhancements. But even if it returns in 2026 (which will happen unless Congress extends the subsidy enhancements), the dollar amount will be much higher. For 2026 coverage, 400% of FPL will be $128,600 for a family of four in the continental U.S.⁵

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.