Most of the components of the Affordable Care Act of 2010 have now been implemented. And the one that is pertinent to almost every American is the individual mandate to purchase a health insurance plan or pay a penalty. 2014 is the first tax year for which penalties will be collected.

For those who did not have a qualified health insurance plan in 2014, it is too late to avoid a penalty unless you qualify for an exemption because of low income. In addition, February 15 was the deadline to enroll in a health plan through the public exchanges for 2015; to be in compliance for all of 2015, your health insurance plan must take effect by March 1.

If you missed the February 15 deadline, you may qualify for an extension. If not, you can still shop for private health insurance plans outside of the ACA Marketplace. It should be noted that if you are insured for just part of the year, you would pay 1/12 of the penalty for each month you are not insured (and no penalty at all if you are uninsured for less than 3 months of the year). For this reason, it is still beneficial for you and your family to obtain health insurance even if you missed the ACA deadlines.

Affordable Care Act Penalties: The penalty for failure to comply with the Affordable Care Act starts out relatively small in 2014. However, there are significant increases in both 2015 and 2016. After 2016, the penalties will be adjusted annually for inflation.

Here is a breakdown of the ACA penalties for each year starting in 2014:

2014: $95 per adult, $47.50 per child, or 1% of your taxable income, whichever amount is higher. The maximum penalty assessed is the average premium nationally for a bronze health care plan from the exchange.

2015: $325 per adult, $162.50 per child, or 2% of your taxable income, whichever amount is higher. The maximum penalty assessed is the average premium nationally for a bronze health care plan from the exchange.

2016: $695 per adult, $347.50 per child, or 2.5% of your taxable income, whichever amount is higher. The maximum penalty assessed is the average premium nationally for a bronze health care plan from the exchange.

How Are the Penalties Collected?

Penalties for failure to obtain an ACA-compliant health plan are collected when you file your tax return for the year in question. If you fail to pay the penalty, the IRS will withhold it from future tax refunds you may have due. At this point, there is no provision in the law to collect penalties via lien, levy or other collection measures.

Complying with the Affordable Care Act can be confusing. However, with significant penalties coming in the near future, it is in the best interests of every taxpayer to obtain a qualified health plan. For more information about ACA compliance, speak with your Mesa tax accountant.