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The Affordable Care Act (ACA) removed obstacles that prevented some people from buying聽聽鈥� but not everyone has signed up, and not everyone who did sign up kept their coverage. Because of that,聽millions will owe聽the individual shared responsibility payment, better known as the Obamacare penalty or ACA penalty, when they file taxes.

The ACA鈥檚 individual mandate requires聽everyone in the U.S. to聽have health insurance, unless you聽qualify for an exemption. If you didn鈥檛 qualify, and went without 鈥渆ssential health benefits鈥� for more than three months in 2016, you鈥檒l have to pay聽a penalty on your coming tax return.

Who pays the Obamacare penalty

The ACA鈥檚 individual mandate requires聽everyone in the U.S. to聽have health insurance, unless you聽qualify for an exemption. If you didn鈥檛 qualify, and went without 鈥渆ssential health benefits鈥� for more than three months in 2016, you鈥檒l have to pay聽a penalty on your coming tax return.

The penalty鈥檚 cost is calculated in one of two ways: You鈥檒l either pay a percentage of your total household adjusted gross income聽鈥� which you鈥檒l figure on your annual tax return 鈥� or a flat rate, whichever is greater.聽Your tax return will also help you聽determine your penalty amount.Each year, the聽penalty will increase聽to keep pace with inflation and encourage people to buy coverage.

For tax year 2016, the penalty will rise聽to聽2.5% of your total household adjusted gross income, or $695 per adult and $347.50 per child, to a maximum of $2,085.

For tax year 2017 and beyond, the percentage option聽will remain at 2.5%, but the flat fee will be adjusted for inflation.

How much聽the Obamacare penalty costs

The penalty鈥檚 cost is calculated in one of two ways: You鈥檒l either pay a percentage of your total household adjusted gross income聽鈥� which you鈥檒l figure on your annual tax return 鈥� or a flat rate, whichever is greater.聽Your tax return will also help you聽determine your penalty amount.

Each year, the聽penalty will increase聽to keep pace with inflation and encourage people to buy coverage.

For tax year 2016, the penalty will rise聽to聽2.5% of your total household adjusted gross income, or $695 per adult and $347.50 per child, to a maximum of $2,085.

For tax year 2017 and beyond, the percentage option聽will remain at 2.5%, but the flat fee will be adjusted for inflation.

The simplest way to avoid the penalty is by having insurance. The ACA set up the health insurance marketplace at聽聽to make this possible. There, you can search for plans and prices, or be directed to your state-specific marketplace that provides the service for your area.Open enrollment聽under the ACA 鈥� during which you can sign up for coverage for the next year 鈥� only lasts for a few months. Outside of open enrollment, you may be able to sign up if you have a聽, such as聽a recent marriage, divorce or birth.

You don鈥檛 have to get your insurance through the marketplace, though. You can also buy聽coverage through your employer, a private insurer or through Medicaid, if you qualify.

Some have chosen to opt out of Obamacare, deciding that the penalty is less of a burden than buying聽insurance; most of them will be fined. But others may be exempt and can聽stay uninsured or have periods of non-coverage without facing the penalty.

How to avoid the Obamacare penalty

The simplest way to avoid the penalty is by having insurance. The ACA set up the health insurance marketplace at聽聽to make this possible. There, you can search for plans and prices, or be directed to your state-specific marketplace that provides the service for your area.

Open enrollment聽under the ACA 鈥� during which you can sign up for coverage for the next year 鈥� only lasts for a few months. Outside of open enrollment, you may be able to sign up if you have a聽, such as聽a recent marriage, divorce or birth.

You don鈥檛 have to get your insurance through the marketplace, though. You can also buy聽coverage through your employer, a private insurer or through Medicaid, if you qualify.

Some have chosen to opt out of Obamacare, deciding that the penalty is less of a burden than buying聽insurance; most of them will be fined. But others may be exempt and can聽stay uninsured or have periods of non-coverage without facing the penalty.

If you qualify for an exemption under the ACA, you won鈥檛 be charged the penalty, even if you don鈥檛 have coverage. You could be exempt if:

• The most affordable coverage costs more than 8% of your household income.
• You were聽uninsured for less than three months of the year.
• You are exempt from filing a tax return because your income is too low.
• You are Native American or eligible for health services through an Indian Health Services provider.
• Your religion objects to the use of insurance.
• You鈥檙e in prison.
• You belong to a health-care sharing ministry.
• You have been abroad for more than one year.
• You qualify for a hardship exemption due to an issue聽such as聽homelessness, bankruptcy, eviction and similarly trying circumstances聽.

If you believe you qualify for an exemption, you can claim it when you file your tax return, or apply on the聽听飞别产蝉颈迟别.

It pays to know whether you鈥檒l be among the millions expected to face the individual mandate penalty when filing tax returns next year. (If you file taxes online, the preparer you choose will calculate any penalty.) That will help you budget now for penalty costs. And with the next open enrollment period always around the corner, it may be time to reconsider your coverage and potential penalty for the year ahead.

Exemptions from the Obamacare penalty

If you qualify for an exemption under the ACA, you won鈥檛 be charged the penalty, even if you don鈥檛 have coverage. You could be exempt if:

• The most affordable coverage costs more than 8% of your household income.
• You were聽uninsured for less than three months of the year.
• You are exempt from filing a tax return because your income is too low.
• You are Native American or eligible for health services through an Indian Health Services provider.
• Your religion objects to the use of insurance.
• You鈥檙e in prison.
• You belong to a health-care sharing ministry.
• You have been abroad for more than one year.
• You qualify for a hardship exemption due to an issue聽such as聽homelessness, bankruptcy, eviction and similarly trying circumstances聽.

If you believe you qualify for an exemption, you can claim it when you file your tax return, or apply on the聽听飞别产蝉颈迟别.

It pays to know whether you鈥檒l be among the millions expected to face the individual mandate penalty when filing tax returns next year. (If you file taxes online, the preparer you choose will calculate any penalty.) That will help you budget now for penalty costs. And with the next open enrollment period always around the corner, it may be time to reconsider your coverage and potential penalty for the year ahead.

Updated Sept. 6, 2016.

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email:elizabeth@nerdwallet.com. Twitter:聽.

The article聽聽originally appeared on聽.