Benefits Buzz

3 States Now Have an Individual Mandate

Posted on June 15th, 2018

The Tax Cuts and Jobs Act signed into law last year wiped out the federal penalty for not having health insurance (a.k.a. the Individual Mandate) starting in 2019. Some state officials are concerned that the elimination of the penalty could destabilize their local insurance markets, and they have responded with their own Individual Mandate requirements.

The state of New Jersey passed an Individual Mandate law on May 30th which will be effective in 2019. The penalty will be calculated using a formula similar to the one used for the current federal mandate. In general, the penalty will be the greater of $695 per adult ($347.50 per child) or 2.5% of household income. The penalty will be capped at the lowest-priced bronze plan available on the state’ s marketplace. Additional details may be found here.

The state of Vermont also passed an Individual Mandate law on May 28th, but this won’t be effective until 2020.  An interesting part of the Vermont mandate is that specific details are not yet known. The financial penalty and enforcement mechanisms will be determined during the state’s 2019 legislative sessions. Additional details may be found here.

The state of Massachusetts was the first state to implement an Individual Mandate, and they did this well before the passage of the Affordable Care Act (ACA). The mandate in Massachusetts was signed into law back in 2006. In general, the state’s Department of Revenue issues guidance each year with details on the penalty amounts which are tied to a predetermined formula.  The penalty amount varies by income with the maximum penalty applying to those without insurance and earning more than 300% of the Federal Poverty Level (FPL). In 2018, the maximum penalty is $119 per month or $1,428 per year. The state imposed penalty is reduced by any amount owed under the current federal penalty. Additional details may be found here.  

Lawmakers in other states are also considering some type of Individual Mandate. States like California, Connecticut, Maryland and Minnesota are considering laws that would require their residents to have health insurance or pay a penalty, and these aren’t the only states considering a mandate. Other states may also follow suit. It’ s unclear which additional states will pass mandate legislation, but it does seem like there is a good chance there will be more. 

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