Both Washington, D.C. and New Jersey have state-level health insurance mandates that require residents to have qualifying health coverage or face potential tax penalties. These mandates are similar to the original federal individual mandate under the Affordable Care Act (ACA), which required health insurance but was effectively removed in 2019.
Here’s a breakdown of each mandate:
Washington, D.C. Health Insurance Mandate
- Mandate Overview:
- The District of Columbia requires all residents to have minimum essential health insurance coverage or qualify for an exemption. Those who do not have insurance or an approved exemption may face a penalty.
- Penalty:
- The penalty for not having coverage is based on the greater of 2.5% of household income or a flat fee, similar to the original ACA mandate calculation. D.C.’s penalty is capped at the cost of the average premium for a bronze-level health plan.
- Exemptions:
- D.C. allows certain exemptions, including financial hardship, certain religious exemptions, and unaffordable coverage options.
- Purpose:
- The mandate aims to keep a stable health insurance pool in D.C. and reduce the costs of uncompensated care. The revenue generated from penalties also supports state health programs.
New Jersey Health Insurance Mandate
- Mandate Overview:
- New Jersey reintroduced the individual health insurance mandate in 2019 after the federal penalty was removed. Residents must have minimum essential health coverage or qualify for an exemption.
- Penalty:
- The New Jersey penalty mirrors the federal ACA’s former penalty: the greater of 2.5% of household income or a per-person rate (adjusted annually), capped at the average premium for a bronze-level health plan in New Jersey.
- Exemptions:
- New Jersey allows exemptions for unaffordable coverage, financial hardship, and certain other specific situations, such as short coverage gaps.
- Purpose:
- The mandate helps maintain coverage stability in New Jersey by incentivizing residents to obtain insurance. Penalty funds are used to support the state’s healthcare programs and subsidize premiums for low-income residents.
Compliance and Filing
For both D.C. and New Jersey residents, proof of health insurance is typically required when filing state taxes. Health insurance providers and employers generally issue Form 1095 documents (e.g., 1095-B or 1095-C) as proof of coverage. Penalties, if applicable, are calculated and collected during state tax filing.
These state-level mandates aim to sustain insurance markets, prevent rate hikes due to a shrinking insurance pool, and help fund state-based healthcare initiatives.
