Does Arizona Have a Health Insurance Penalty?

Arizona follows federal law when it comes to health insurance. The name of the governing law is the Affordable Care Act (ACA), also referred to as Obamacare. The ACA requires residents to have a minimum level of health insurance coverage or face a tax penalty. This is often called the individual mandate. While technically the individual mandate of the ACA is still federal law, the associated tax penalty was eliminated at the end of 2018. So, does Arizona have a health insurance penalty? Several states have enacted their own individual mandate penalties, but Arizona is not one of them.

Does Arizona Have a Health Insurance Penalty?
Does Arizona Have a Health Insurance Penalty?

Why Was There a Penalty in The First Place?

The lawmakers who crafted the Affordable Care Act were aware that insurance only works as intended if there are enough healthy people (low-cost) enrolled to provide a balance to the sicker (high-cost) people that are enrolled. With this in mind, they wrote an individual mandate into the ACA which is called the shared responsibility provision. But they also knew they would have to provide some type of incentive to encourage enrollment. In this case, it was a negative incentive in the form of a tax penalty for people who did not carry what they called minimum essential coverage unless they were found exempt.

This tax penalty was repealed under the Tax Cuts and Jobs Act of 2017 and has not been enforced since the beginning of 2019. So, while the federal individual mandate technically still exists, there is no penalty that would make it enforceable.

Am I Required to Get Health Insurance?

There is no tax penalty to force you to comply with federal law, but there is definitely a financial incentive for you to have proper health insurance coverage. In 2019 a study was published in the American Bankruptcy Institute Law Review that found bankruptcy was twice as likely for people who either didn’t have insurance or who let their insurance lapse for a period of just two years. With the cost of healthcare continuing to rise, a serious medical issue can easily cause financial ruin. Health insurance is generally a cost-effective alternative.

How Do I Enroll in Health Insurance?

Open Enrollment Period

Open enrollment is a period of time each year when you are able to sign up for health insurance, make changes to your current plan or even cancel your plan. In Arizona, the open enrollment period for ACA is November 1 – December 15th. (Unless an extension is granted as it was in 2021 for the 2022 plan year.)

If you miss the open enrollment period, you could have to wait until the next one unless you become eligible for a special enrollment period.

Special Enrollment Period (SEP)

To qualify for a special enrollment period you must experience what’s known as a qualifying life event. This would make you eligible to sign up for health insurance after the regular open enrollment period has closed. There are many events that could qualify you. The long list includes:

  • Marriage/Divorce
  • Birth or Adoption of a Child
  • Moving Out of State
  • Losing Coverage (various reasons)

If you qualify for a SEP, you normally will have 60 days from that qualifying event to enroll in a new insurance plan.

Non-ACA Health Insurance Plans

High-quality non-ACA health insurance plans can be purchased at any time during the year, not just during open enrollment. An Arizona insurance broker can be a valuable resource to help navigate through the options available to you.

Does Arizona Have a Health Insurance Penalty?
Does Arizona Have a Health Insurance Penalty?

Where Can I Get Help?

This post has only scratched the surface of the options available to you. No one is expected to understand all of the available options. What is right for one person or family may not be right for someone else. Lehrman Group has been a trusted provider and broker agent for health insurance plans in Arizona since 1988. Our brokers can evaluate your specific needs and help you choose a plan that is appropriate for your situation.