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

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

The answer is that 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 (87% in 2026) qualify for premium subsidies.¹ This is still true even after the federal subsidy enhancements expired at the end of 2025. Before those subsidy enhancements were implemented in 2021, about 86% of Marketplace enrollees were receiving premium subsidies.² That grew to 93% in plan years 2024 and 2025³ with the subsidy enhancements in place.

Although subsidy eligibility became more widespread due to the subsidy enhancements, most enrollees had already qualified for subsidies before the enhancements were implemented. So although subsidy eligibility declined from 2025 to 2026, it returned to about the same level it was before the subsidy enhancements were put in place.

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. The ACA’s EHBs were designed to mirror the scope of coverage that was already typically covered by large employer-sponsored plans pre-ACA.)⁴ And all ACA-compliant plans are required to cover pre-existing conditions without any waiting periods.⁵

But if you buy a plan that’s not ACA-compliant, the insurer will likely 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
• Farm Bureau plans (not considered insurance, so exempt from state and federal insurance rules) in Alabama, Arkansas, Florida, Indiana, Iowa, Kansas, Mississippi, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Tennessee, and Texas⁶
• Travel insurance
• Accident insurance
• 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, so it’s important to read the plan details to understand what coverage you have.

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 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.

You also won’t be able to sign up for an ACA-compliant plan until the next open enrollment period, with coverage effective in the coming year. Although special enrollment periods are available when people have certain qualifying life events, most special enrollment periods have a requirement that the applicant already had minimum essential coverage in place before the qualifying event. None of the alternative types of coverage described above is considered minimum essential coverage.⁷

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 because it’s individual market coverage, it is considered minimum essential coverage⁷ – so it will fulfill a state-based individual mandate and you won’t be subject to a penalty.

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, due to increases in premiums and 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). For 2026 coverage, 400% of FPL is $128,600 for a family of four in the continental U.S.⁸