Note: On Dec. 20, 2017, Congress passed the Tax Cuts and Jobs Act, which included permanent effective repeal of the individual mandate by zeroing out the penalty beginning in 2019. Most individuals are still required to maintain coverage in 2018 or pay a penalty when they file their 2018 federal income tax return in 2019. Please see our news alert for more details.
The Individual Mandate requires most Americans to have health insurance or pay a penalty when they file their federal income tax return. Individuals must have "minimal essential coverage," which includes:
- Coverage under an employer-sponsored plan
- Coverage under an individual insurance policy
- Coverage under a government-sponsored plan such as Medicare or Medicaid
- U.S.-issued expatriate insurance coverage
Each of these types of coverage has different enrollment timing. Employers determine the annual enrollment period for their coverage. The federal government determines eligibility and enrollment timing for Medicare, and states manage Medicaid enrollment.
Enrollment in Individual Health Insurance
People can enroll in individual health insurance directly with an insurance company or through the health insurance marketplaces created under the Affordable Care Act (ACA). Federal premium subsidies are only available to those who enroll in individual coverage through the marketplace. About 70 percent of people who buy coverage through the marketplaces receive subsidies.
The annual marketplace enrollment period begins each November 1 and ends on January 31 of the following year. Individuals must enroll by the 15th of the month for coverage to take effect on the first of the next month.
Individuals who lose coverage or have a life event such as marriage or the birth of a child may be eligible for a special marketplace enrollment period during other times of the year.
If you have any questions about enrollment through a marketplace or want to enroll, please visit HealthCare.gov or call 1-800-318-2596.
Penalty for Not Having Health Coverage
If you are uninsured for more than three consecutive months of any year, you will owe a penalty when you file your federal income tax return for that year. The penalty is based on the number of months during which you did not have coverage. The penalty is calculated two different ways – as a fixed amount for each person without coverage or as a percent of your annual household income. You pay the larger of the two amounts.
People with low incomes and individuals who meet certain conditions may receive an exemption from the Individual Mandate.
To learn more, please read the individual mandate penalty and exemptions page.
Tax Forms for the Individual Mandate Requirement
The Internal Revenue Service (IRS) created tax forms specifically to report health insurance coverage on federal income tax returns. These forms are returned to the IRS by health insurers, health marketplaces and employers. Additionally, Forms 1095-A, B and/or C are sent to any person who had health coverage that met the Individual Mandate requirement at any time during the previous calendar year, as outlined below:
- Form 1095-A, Health Insurance Marketplace Statement, sent to individuals who are enrolled in coverage through the Marketplace
- Form 1095-B, Health Coverage, sent to individuals who have health coverage that is not reported on Form 1095-A or Form 1095-C
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, sent to individuals who have coverage through applicable large employers
These forms must be sent by the end of January, following the year of coverage to help people complete their individual tax returns. 1095 Forms should also be shared with covered adult dependents who file their own taxes.
In some instances, people may receive more than one 1095 Form. For example, if an individual had more than one coverage provider or a change in coverage or employers during the year, multiple forms would be issued.
For more information on 1095 Forms, please visit the IRS's FAQ page.
More on Reform
Public Marketplaces/ Exchanges
Marketplaces are the government run online shopping hubs for health insurance, available in every state.
AFFORDABILITY UNDER THE ACA
Explore the concept of affordability within the employer and individual mandates under the ACA.
Essential Health Benefits
These new standards are required for individual and small group plans and may also affect large group plans.
New rules take effect each year. Keep up to date with our interactive tool.
Common questions, common answers. Our FAQs simplify the legal lingo.
Get a snapshot of your annual employer responsibilities and compliance deadlines.