When the Affordable Care Act’s (ACA) (otherwise known as Obamacare) individual mandate took effect in 2014, so did the penalty for going without health insurance.
Until recently, if you didn’t enroll in minimum essential coverage and were not exempt from the mandate you could owe a federal tax penalty known as the shared responsibility payment. That’s no longer the case.
As of Jan. 1, 2019, the federal tax penalty was eliminated. No ACA-compliant health insurance in 2021? No federal penalty owed.
Some states do have penalties for not having ACA-compliant coverage. Learn which states have mandates and penalties.
And you could still owe a tax penalty if you have unpaid taxes from years prior to 2019.
What This Means for Your 2021 Health Insurance Options
The federal tax penalty may be a thing of the past, but there’s no doubt that major medical insurance remains the best option for many people, especially those who:
- Need comprehensive benefits
- Want a policy that complies with the Affordable Care Act (ACA)
- Need guaranteed issue coverage due to health history or pre-existing conditions
That said, if for one reason or another you want to explore other, non-ACA qualifying health insurance options and decide to enroll in one of them, you can do so without facing the federal tax penalty in 2021.
Just be aware that the options below are not considered minimum essential coverage under the ACA, which means they are not guaranteed issue (i.e., they do not cover pre-existing conditions) and do not include comprehensive benefits.
Non-ACA + Supplemental Coverage Options
Short Term Medical Insurance
Short term medical is designed as temporary health insurance coverage for people who are in between major medical policies. Plans include a range of benefits to help pay for catastrophic medical expenses and you can apply anytime during the year.
Short term plans last from 30 to 364 days with duration limits varying by state. These plans are not ACA-qualifying, which means they don’t include the essential health benefits and don’t cover pre-existing conditions. As a result, premiums are typically less than major medical, however, your premium amount depends on the benefits selected.
Learn about short term health insurance and see if it’s right for you.
Hospital Indemnity Insurance
Fixed-benefit indemnity insurance, often known as hospital indemnity insurance, provides benefits that help pay for hospital, surgical and critical illness-related expenses. Benefits are paid as fixed-dollar reimbursements for covered medical expenses at specific durations.
For example, if you were in the hospital for 3 days and had a hospital indemnity plan with a daily inpatient hospital confinement benefit of $2,000 per day, then that policy would reimburse you a total amount of $6,000 ($2,000 per day x 3 days).
As with short term medical and other coverage, hospital indemnity benefit amounts and limits vary by plan. In some states, you must already have a major medical policy in order to enroll in a hospital indemnity plan as supplemental coverage.
Learn about hospital indemnity insurance and see if it’s right for you.
How to Get Major Medical Health Insurance Outside of Open Enrollment
If you’re looking for comprehensive, ACA health insurance and it’s not the annual open enrollment period for individual major medical policies, then consider the following. Do you qualify for:
- A special enrollment period to obtain an ACA plan
- Medicaid, in which case you can enroll year-round
- Other minimum essential coverage options that are available year-round
- Job-based benefits within the next 3 months, in which case you might want to consider short term medical insurance
Learn more about how to get health insurance outside of open enrollment.
What if You go Without Health Insurance?
The federal tax penalty may no longer be a factor, but you may still want to obtain some level of coverage, such as a short term medical policy, to help pay for covered medical expenses should you experience an unexpected illness or injury.
Why? Well, evidence suggests that uninsured people are less likely to receive healthcare than their insured friends and family, and when they do, they pay more for it.
Specifically, Kaiser Family Foundation research found that:
- 24% of nonelderly adults without insurance postponed medical care due to cost compared to only 6% of those with private coverage and 9% of those on Medicaid or another public plan
- 20% of nonelderly adults without insurance went without needed care due to cost, compared with 3% of those with private coverage and 8% of those with public coverage
- Nonelderly adults without insurance for an entire year pay for 1/4 of their care out of pocket and hospitals frequently charge uninsured patients much higher rates compared to those paid by private health insurers and public programs
Find short term health insurance plans in your area to compare coverage options and costs.
Summary + Next Steps
If you missed out on a major medical policy during open enrollment, health insurance options like short-term medical policies, though not ACA-compliant and not minimum essential coverage; do provide a range of benefits for unexpected medical care and often have premiums that are a fraction of major medical insurance premiums.
You can get a short term health insurance quote online today and enroll tomorrow (if you are eligible) since these policies aren’t subject to the open enrollment period.
Or, call [phone_number] to speak with a licensed agent about your coverage options.
As mentioned at the top of this page, major medical may still be the best choice if you:
- Would like the type of comprehensive coverage that only major medical insurance provides
- Do not qualify for alternative coverage due to health history
- Qualify for a subsidy (applies only to major medical plans purchased from a government health insurance exchange)
The materials available at this web site are for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney or tax professional to obtain advice with respect to any particular issue or problem.