Under the Affordable Care Act (ACA) of 2010, if you did not have an ACA-approved health insurance plan for 2015, you will owe a penalty (unless you fall into one of several categories of exceptions) when you file your taxes in April. The penalty for failure to have health insurance in 2015 is $325 per adult, $162.50 per child (under 18), or 2% of household income, whichever is higher.

The penalties for 2015 may seem high, but they are about to go up again for tax year 2016. If you fail to carry health insurance in 2016, your penalty will be $695 per adult, $347.50 per child (under 18) or 2.5% of household income, whichever is higher. The fee is paid when you file your tax return for the year in question, and the IRS will deduct it from any refund you may be receiving.

Though it is too late to do anything about 2015, there is still time to become ACA-compliant for 2016. Open enrollment for health insurance plans through the public exchanges began October 31, 2015 and runs through January 31, 2016. If you are unable to obtain a qualified health plan through your employer or the private market, you must sign up during this window to get covered for 2016.

Are the Health Care Plans on the Public Exchange Expensive?

Unfortunately, health care costs have been rising exponentially for several years, and 2016 will be no different. The cost of health insurance will go up an average of 7.5% in 2016, and for many working families, the monthly premiums will take a significant chunk out of the monthly budget. The good news is that many of these same working families will qualify for a subsidy in the form of a tax credit to help defray the cost of coverage.

Many of the “working poor” actually qualify for 100% coverage under Medicaid. However, even those earning up to 400% of the poverty level are eligible for some form of subsidy. This means individuals earning up to $47,000 per year and a family of four earning up to $97,000 per year can still qualify for at least a partial tax credit to help pay their premiums.

Last year, millions of Americans missed out on the tax credits they were eligible for under the ACA. Millions more went without health coverage altogether because they believed they could not afford it. If you are unsure if you can afford health coverage for 2016, speak with your small business accountant to discuss your individual circumstances. You may be surprised at how much assistance is available to get your family covered for the upcoming year.