Medical costs could skyrocket as ACA subsidies expire
Millions are at risk of skyrocketing health costs in 2026 if Congress fails to extend health care subsidies.
Millions of Americans may have decided to drop their health insurance this year as additional federal aid from the coronavirus era expires, but people living in certain places may be paying a penalty for that choice.
The federal government ended penalties for Americans without health insurance in 2019, but four states and Washington, D.C., still impose penalties. The penalty, typically paid when filing state taxes, is intended to encourage healthy people to buy insurance and keep costs down for everyone.
These fines are sometimes referred to as “shared liability payments,” based on the idea that it is everyone’s responsibility to make health insurance available, affordable, and accessible, even if they cannot find affordable health insurance on their own. The only way to avoid fines is to get a waiver or get health insurance.
“The fines can be quite significant,” said Kiersten DeFleuri, a Medicare expert at Daniel A. White & Associates.
Where can I find my personal shared liability payments?
Americans living in California, Massachusetts, New Jersey, Rhode Island, and Washington, D.C., are still subject to penalties if they do not have health insurance.
How much is the fine?
Fines vary by jurisdiction, but are generally a flat fee per person or a percentage of income, whichever is higher, up to the cost of the lowest-level health plan.
- Californians who are uninsured and exempt for each month in 2025 for themselves and their dependents will pay $950 for each adult or more, $475 for each dependent child, or 2.5% of their gross income that exceeds the filing threshold for their filing status. Whichever is higher, according to the California Franchise Tax Board. Fines for an uninsured couple could be more than $1,900, and fines for a family of four with two dependent children could be more than $2,850, the report said.
- Massachusetts imposes income-based penalties and caps are based on the lowest-cost ConnectorCare plan in 2025 or the lowest-cost individual bronze premium in the Affordable Care Act market.
- New Jersey charges an amount based on your income and family size, and is capped at the average statewide annual premium for the New Jersey Bronze Health Plan. According to the state’s website, fines for each adult per month range from a minimum of $695 to a maximum of $4,908, depending on income.
- Rhode Islanders who were uninsured last year will pay a flat fee of $57.92 per month per adult, $28.96 per month per child under 18, or 2.5% of their modified adjusted gross income in excess of the state’s filing threshold, whichever is greater. The total amount cannot exceed the average monthly cost of an ACA Exchange Bronze level health plan of $357.
- In Washington, DC, you are taxed up to the greater of $795 per month per adult, $397.50 per child, $2,385 per family, or 2.5% of family income in excess of the federal tax filing threshold. Total payments are limited to the Bronze plan premium rate.
Are the fines still lighter than health insurance?
Experts say penalties generally don’t save much money, if any at all, because they’re meant to deter people from not buying health insurance.
Assuming New Jersey adults pay a flat monthly minimum fine of $695, Fleury said. Bronze plans in Jersey City, N.J., are available for between $350 and $1,400 a month, and “good plans are around $800 a month,” she said.
It might make sense to pay at least catastrophic or bronze-level health insurance, or $100 more than the penalty you’d pay for good insurance, she says.
Additionally, said Miklos Ringbauer, founder of MiklosCPA Inc. in Southern California, “the cost of doctor’s visits and penalties will probably exceed very basic health insurance.”
How can people avoid penalties?
To avoid penalties, people living in these states and Washington, D.C., can check to see if they qualify for an exemption or enroll in a minimum health insurance plan to meet the requirements.
Exemptions typically include financial hardship, inability to pay for insurance (if the basic plan premium exceeds a set percentage of household income), a short coverage gap, usually no more than three months, or income below the tax filing threshold.
Ringbauer said if you need to buy health insurance, check for state subsidies that can help lower insurance prices. More than 20 states have state exchange programs that could help fill the gap left when additional federal aid expires.
He said “these state exchanges are now financially strong enough” to be able to provide grants this year.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
