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

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.

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 in order to avoid the penalty in those states, and there are some types of minimum essential coverage that 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.

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 that the plan spends 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 are not required to cover the essential health benefits, most do so voluntarily in an effort to attract and retain employees).

If you’re purchasing your own coverage, there is a wide range of plans that aren’t required to comply with the ACA’s rules. These include short-term health insurance, Farm Bureau plans in Iowa, Tennessee, and Kansastravel insurance, accident supplements, limited benefit plans, fixed indemnity plans, and other supplemental or limited coverage.

As long as you’re not in a state that has its own 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 a 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.

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.

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Related terms

individual mandate

short-term health insurance

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