Thought the ACA Individual Mandate Was History? Think Again!

It was big Affordable Care Act (ACA) news at the end of 2017 when the newly enacted tax reform law included a provision to drop the individual mandate penalty to zero dollars starting in 2019. Although it wasn’t technically a repeal of the individual mandate, it had a similar effect. If you thought that was the last you’d hear about the individual mandate, you may have a surprise coming! Not everyone agreed with the reduction of the individual mandate penalty, and in early 2018, nine states plus the District of Columbia were considering legislation to require their residents to have health insurance coverage or, in other words, reinstate an individual mandate. Two states, New Jersey and Vermont, and the District of Columbia were successful in this effort. They join Massachusetts, which enacted an individual mandate in 2006 before ACA existed.

Thought the ACA Individual Mandate Was History? Think Again!

New Jersey

On April 13, 2018, New Jersey lawmakers passed a bill that requires residents without minimum essential health coverage to pay a fine equal to 2.5% of their household income or $695 per adult and $347 per child, whichever is greater. If it’s based on a per-person charge, the maximum household/family penalty will be $2,085. The amounts will be adjusted each year for inflation. The maximum penalty based on household income will not exceed the average yearly premium of a New Jersey bronze plan. Exemptions based on religious beliefs and hardship due to unaffordable coverage will be determined by the state treasurer. If the federal government stops providing federal subsidies to defray the cost of individual health insurance policies in the ACA exchanges, the New Jersey individual mandate penalty will not be enforced.

Individuals who have coverage offered by an association, trust or multiple employer welfare arrangement (MEWA) do not avoid the penalty, unless the association, trust or MEWA complies with certain New Jersey state insurance laws. This provision may make association health plans (AHPs) a less appealing option even though the federal Department of Labor recently released regulations to expand access to AHPs.

For employers and plan sponsors, there will be new reporting requirements. The process details are yet to be determined, but the law requires that data on covered individuals, such as names, Social Security numbers and dates of coverage, be reported. The state may choose to accept the forms currently required by ACA (Forms 1095-C and 1095-B) or a document providing similar information.

New Jersey’s governor signed the bill on May 30. The new legislation will be effective on January 1, 2019. Revenue collected from New Jersey’s individual mandate penalty will help fund a state-based reinsurance program, established under separate legislation, also signed by the governor on May 30.


On May 22, 2018, the Vermont legislature passed a bill to create an individual health coverage mandate for state residents beginning in 2020. The governor signed the bill on May 28.  Details of how the mandate will work have not yet been decided and will be considered during Vermont’s 2019 legislative session. The new law established a working group to make recommendations to the legislature on how the mandate should be enforced and administered. These recommendations are due on or before November 1, 2018.

District of Columbia

ACA University

On February 21, 2018, the health exchange executive board of the District of Columbia (D.C.) formally approved a resolution recommending adoption of an individual mandate. The D.C. Council voted to enact this recommendation in the Budget Support Act for fiscal year 2019 on June 27. If the mayor signs the act, which is expected, it will become effective at the beginning of 2019. District residents who do not maintain minimum essential coverage will have to pay a penalty unless they qualify for an exemption. The penalty structure will be similar to the one originally instituted by ACA, but the list of exemptions for lower income residents is broader than with ACA. The revenue collected from the individual mandate penalty will go into a fund designed to boost outreach to uninsured residents and support other initiatives to increase insurance availability and affordability. Note: Congress has 30 days to intervene in any law passed in Washington, D.C., so congressional Republicans could still try to repeal this mandate as part of the appropriations process.


The Massachusetts individual mandate was enacted in 2006 and was the blueprint for the ACA mandate. State residents must have minimum creditable coverage (MCC), which is generally a higher level of coverage than ACA minimum essential coverage, or pay a penalty. The penalty amount varies by income with a maximum penalty of $1,428 in 2018. In Massachusetts, the penalty only applies to adults, whereas under ACA, families also have to pay a penalty for having uninsured children. Employers must file reports annually to inform the state whether their health plans meet the MCC requirements. They must also distribute individual notices to covered workers.

More to Come?

Even if you don’t have workers in the areas listed above, stay tuned to the International Foundation resources. Several other states may propose and enact legislation to reinstate an individual mandate in the months to come.

Kelli Kolsrud, CEBS
Director, Information Services and Publications Department at the International Foundation

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Kelli Kolsrud, CEBS

Director, Research and Publications Department at the International Foundation Favorite Foundation service/product: Personalized research assistance provided by the Foundation’s information specialists Benefits related topics that interest her most: Health care benefits (they’re especially interesting post-ACA!); work-life benefits Favorite Foundation conference/event moment: Meeting and spending quality time with Olympic gold medalist Scott Hamilton at the 59th U.S. Annual Conference. Personal Insight: Kelli can connect you to the facts on nearly any benefits topic in the US or Canada, but when she gets away from her work, her focus often shifts to England. Favorite free time activities include watching Downton Abbey and immersing herself in Jane Austen.

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