Understand the Massachusetts Health Insurance Penalty
The Massachusetts health insurance penalty is charged to most adult residents, age 18 or older, who don't carry health insurance that meets the state's minimum coverage standards. These standards are referred to as "minimum creditable coverage."
Under the Massachusetts Health Care Reform Law, you'll be charged a tax penalty for each month of the year that you're without coverage if the state determines that you're able to afford health insurance but you didn't buy a plan. Individuals who fall below certain income thresholds are exempt, however.
Reporting Health Insurance Information
Massachusetts residents and some part-time residents must file Schedule HC with their state tax returns.
You have 63 days to acquire coverage if you've recently moved into the state.
This form reports information regarding your health insurance coverage during the year. Your insurer should send you a Form MA 1099-HC if you have private health insurance, providing you with the information you'll need to fill out Schedule HC.
Where to Get Affordable Insurance
Check the state’s health insurance website, the Massachusetts Health Connector, known around the state simply as the "Health Connector." It's an independent state agency that helps Massachusetts residents find affordable health insurance coverage so they can avoid the Massachusetts health insurance penalty.
The Health Connector offers low-cost and even no-cost plans that meet minimum coverage standards and they have the state’s seal of approval for quality and affordability.
Limits on Tax Penalties
You must pay any penalty you owe for lack of insurance when you submit your Massachusetts income tax return. By law, penalty amounts can't exceed 50% of the least costly monthly insurance premium you would have qualified for through the Health Connector, but the penalty is imposed for each month that you go without coverage during the tax year.
A gap in insurance coverage of three or fewer consecutive months isn't penalized.
The state establishes affordability standards each year that determine whether individuals and families can afford health insurance based on their incomes. You're not subject to the Massachusetts health insurance penalty if you can't afford health insurance according to these standards. This provision generally covers those with incomes at or below 150% of the federal poverty level.
Nonetheless, your penalty would come in at $127 a month or more than $1,500 a year if your income is more than 300% above the federal poverty level and you opt not to purchase insurance coverage. This percentage works out to annual earnings of $36,420 as of the 2019 tax year if you're single.
You can apply for a Certificate of Exemption through the Health Connector website. The certificate serves as proof that you're exempt from penalties due to your inability to afford the required insurance coverage.
You Can Appeal the Penalty
Massachusetts does provide an appeals process if you're hit with a penalty but you were simply unable to get coverage. This typically means that you suffered a hardship, which can include:
- Domestic violence
- Death of a spouse or family member
The penalty won't be assessed while your appeal is pending.
Exemption for Religious Beliefs
A religious exemption is available for anyone whose faith provides a basis for not purchasing health insurance coverage, but you might be subject to a penalty anyway if you claim a religious exemption and you received medical care during the tax year and it's determined that you could have afforded health insurance. Preventative dental care, vaccines, and physical exams required by your employer aren't considered medical care for purposes of this exemption.
Massachusetts Health Care Reform and the ACA
The Massachusetts Health Care Reform Law predated the Affordable Care Act (ACA), and the ACA and Massachusetts law work in tandem to some extent. Generally, you're not subject to the Massachusetts health insurance penalty if you're compliant with the ACA. You can qualify for ACA subsidies through the Health Connector.
The federal tax penalty for not carrying health insurance was repealed by the Tax Cuts and Jobs Act effective tax year 2019.
Massachusetts expanded its Medicare program under the ACA, so if you earn less than 133% of the federal poverty level, you might be able to get coverage through the state, called MassHealth. This opens up another option for some taxpayers to avoid the penalties.
Mass.gov. "Health Care Reform for Individuals." Accessed July 27, 2020.
Mass.gov. "TIR 19-1: Individual Mandate Penalties for Tax Year 2019." Accessed July 27, 2020.
Mass.gov. "830 CMR 111M.2.1: Health Insurance Individual Mandate; Personal Income Tax Return Requirements." Accessed July 27, 2020.
IRS. "Questions and Answers on the Individual Shared Responsibility Provision." Accessed July 27, 2020.