The Affordable Care Act was passed to encourage Americans to purchase and maintain health insurance policies for themselves and their families. Since its passage, however, many people either refuse or cannot afford to buy coverage. 

If you are one of the taxpayers who cannot or choose not to buy health insurance, you may wonder what kind of a monetary fine you will be facing when you file taxes. This information will help you understand how penalty amounts are determined and also prepare for any fine you may owe.

ACA Penalty Amounts by Year

The government began levying fines in 2014 against taxpayers who refused or failed to purchase bronze level health insurance for themselves or their families. During that first year, taxpayers were told that they would pay $95 per adult 18 years of age or older, plus $47.50 per uninsured child, to a maximum of $285 or one percent of their household income, whichever amount was greater.

Many taxpayers mistakenly believed that they would pay a fine of $95 and nothing more, however. They were shocked when they realized that their fines were in fact many times more substantial than that amount.

In fact, many people quickly realized that one percent of their household income far exceeded the $95 per adult and $47.50 per child fine and even the $285 per household penalty. Many individuals were forced to pay a fines that cost them hundreds and even thousands of dollars.

Fines for 2014 could not exceed the amount that a household would pay for bronze level marketplace insurance, which cost $2448 that year. Even so, many people were not prepared for how expensive the ACA fines would actually be once they filed their returns.

The fines for 2015 as dictated by Obamacare are much higher than the penalties levied in 2014. The 2015 fines are set at $325 per uninsured adult 18 years and over, $162.50 per uninsured child, to a maximum of $975 or two percent of a household's income, whichever amount is greater.

The penalty is capped at the cost of bronze level ACA insurance. As with 2014 the fines can far exceed the $325 adult/$162.50 amount if two percent of a family's household income is greater.

The fines continue to increase significantly in 2016 for not buying ACA insurance. The penalties in 2016 are expected to $695 per uninsured adult, $247.50 per uninsured child, to a maximum of $2085 or 2.5 percent of a family's income. To avoid these hefty fines, the government continues to encourage taxpayers to buy health insurance from the ACA marketplace or from their employers.

Penalty Exemptions

Another way to avoid paying the ACA penalty involves qualifying for one of the stipulated personal exemptions as outlined by the federal government. The approved personal exemptions are:

• Earning an income at or below the stipulated low-income threshold amount
• Short coverage gap of less than three months
• Religious conscience as approved by the Social Security Administration
• Participating in a health care sharing ministry
• Living abroad
• Participating in AmeriCorps, Vista, or the NCCC
• Being an undocumented resident
• Incarceration
• Being a member of a federally recognized Native American tribe

You may also escape paying a penalty if you meet one of the approved hardship exemptions like:

• Homelessness
• Getting an eviction or foreclosure
• Getting a utility shut-off notice
• Being a victim of domestic violence
• Man-made or natural disaster victim
• Filing for bankruptcy
• Having excessive medical bills
• Having substantial caregiver expenses
• A child denied for Medicaid or CHIP
• Eligibility through an appeals decision
• Medicaid eligible but live in a state that did not expand Medicaid
• Canceled insurance coverage

If you meet any of these criteria and want to request an exemption, you must complete the application found at Healthcare.gov. You also must receive an electronic confirmation number, or ECN, to utilize when you file your tax return.

Obamacare was designed to encourage Americans to buy health insurance for themselves and their families. People who refuse or cannot afford to buy health insurance may face paying penalties when they file their taxes. You can prepare for any ACA fine you may owe by learning how and when penalties are levied against taxpayers.