Individual Mandate – Vermont

Beginning in 2020, Vermont imposes a state individual mandate that requires individuals in Vermont to maintain acceptable health coverage. The Vermont law largely mirrors the federal individual mandate requirement under the Affordable Care Act (ACA) that was effectively eliminated, beginning in 2019. However, there is currently no financial penalty for failing to maintain coverage under the Vermont law.

Vermont was among the first states to enact its own health insurance individual mandate. The law itself is merely a framework, and leaves many details to be determined at a later time. Individuals in Vermont should become familiar with the state individual mandate requirement before it takes effect in 2020 and monitor any future developments.

Overview

Vermont’s individual mandate requires most individuals in the state (and their family members) to be covered under minimum essential coverage for each month of the year, beginning in 2020.
As originally written, the law stated that the legislature intended to establish a financial penalty or other enforcement mechanism at a later time. However, on June 17, 2019, the Vermont legislature amended the state individual mandate to eliminate sections related to enforcement. As a result, individuals in Vermont will not be penalized for failing to maintain acceptable health coverage.

• Vermont Department of Financial Regulation – https://dfr.vermont.gov/
• Vermont Department of Taxes – https://tax.vermont.gov/

Minimum Essential Coverage

For purposes of the Vermont individual mandate, minimum essential coverage (MEC) has the same definition as under the ACA. MEC includes coverage under:

• A government-sponsored program, such as coverage under the Medicare or Medicaid programs, the Children’s Health Insurance Program (CHIP), TRICARE and certain types of veterans’ health coverage;
• An eligible employer-sponsored plan (including a self-funded plan, COBRA and retiree coverage), defined as any plan offered by an employer to an employee which is a governmental plan or a plan or coverage offered in the small or large group market within a state;
• A health plan purchased in the individual market; or
• A grandfathered health plan.

MEC in Vermont also includes any other coverage deemed by the Vermont Department of Financial Regulation to constitute MEC.

Affected Individuals

The requirement to maintain MEC applies to individuals of all ages (including children), unless that individual falls within a specific exception or is exempt. The following categories of individuals are exempt from the Vermont individual mandate:

• Individuals who are a member of a recognized religious sect;
• Individuals not lawfully present in the United States; or
• Incarcerated individuals.

Reporting Requirements

To help administer the individual mandate, Vermont law requires individuals to indicate on their state income tax return whether they had MEC for each month of the year. In addition, if requested by the Vermont Department of Taxes, individuals will be required to submit a copy of the individual statement furnished to them by the provider of the MEC under the ACA’s federal reporting requirement under Internal Revenue Code Section 6055.
Notably, Vermont law provides that the state will impose its own provider reporting requirement similar to the federal Code Section 6055 reporting requirement in the event that the federal requirement is suspended or eliminated for any taxable year.