The Federal ACA Penalty: What Happened?

When the Affordable Care Act was signed into law in 2010, it included an individual mandate — a requirement that most Americans maintain minimum essential health coverage or pay a tax penalty. At its peak, the federal penalty was the greater of $695 per adult ($347.50 per child) or 2.5% of household income above the tax filing threshold.

However, the Tax Cuts and Jobs Act of 2017 effectively eliminated the federal individual mandate penalty by reducing it to $0 starting in 2019. As of 2026, there is no federal tax penalty for being uninsured. You will not owe anything to the IRS simply for lacking health coverage.

States with Active Individual Mandate Penalties in 2026

Note: Penalty amounts are subject to annual adjustment. Always verify with your state's tax authority for the most current figures.

Exemptions from State Individual Mandate Penalties

Even in states with active mandates, there are exemptions that may allow you to avoid the penalty. Common exemptions include:

• Financial hardship: If the lowest-cost available plan would cost more than a certain percentage of your income, you may be exempt.
• Short coverage gap: Most states allow a gap in coverage of up to 3 consecutive months without a penalty.
• Religious conscience: Members of certain religious groups that oppose insurance may be exempt.
• Incarceration: Individuals who were incarcerated for the full year are typically exempt.
• Not required to file a state tax return: If your income is below the filing threshold, you are generally exempt.
• Member of a federally recognized tribe or health care sharing ministry.

The process for claiming an exemption varies by state. In most cases, you will need to apply for the exemption through your state's Marketplace or claim it on your state tax return.

Why Getting Covered Is Still the Right Move — Even Without a Penalty

Even if you live in a state with no individual mandate penalty, going without health insurance carries enormous financial risk. A single emergency room visit can cost $1,500 to $3,000 or more. A hospital stay for a serious illness or injury can easily reach $30,000 to $100,000. Without insurance, you are personally responsible for every dollar of those costs.

The good news is that ACA Marketplace plans are more affordable than many people realize. With premium tax credits, many individuals and families can get comprehensive coverage for $0 to $50 per month. The question is not whether you can afford health insurance — it is whether you can afford to be without it.

How to Get Covered and Avoid Any Potential Penalty

The most straightforward way to avoid any state penalty and protect yourself financially is to enroll in a qualifying health plan. Qualifying coverage includes ACA Marketplace plans, employer-sponsored plans, Medicare, Medicaid, CHIP, and certain other government-sponsored programs. Short-term health plans do not count as qualifying coverage in most states with a mandate.

If you are currently uninsured and outside of the Open Enrollment Period, check whether you have had a recent qualifying life event (such as a job change, move, or change in household size) that would give you a Special Enrollment Period. If not, Medicaid may be available to you year-round if your income qualifies. Our agents can help you determine your options quickly — call 888-982-0356 for a free consultation.