Starting in January 2014 most people will be required to have health insurance or pay a penalty.

Health insurance can be provided by your employer, bought on your own, through Medicare or Medi-Cal.

The penalty in 2014 is 1% of your income or $95 (whichever is greater).

The penalty in 2015 increases to 2% of your income or $325 (whichever is greater).

In 2016, the penalty increases to 2.5% of your income or $695 (whichever is greater).

This penalty will be paid with your taxes at the end of the year. The penalty can not be more than national average of the annual premium for a bronze level plan sold through health insurance exchanges.

You’ll get proof of your health insurance coverage from your plan.

You do not have to pay a penalty if you fall into the following groups:

People who would have to pay more than 8 percent of their income for health insurance

People with incomes below the threshold required for filing taxes (in 2012, $9,750 for a single person and $27,100 for a married couple with two children)

People who qualify for religious exemptions

Undocumented immigrants

People who are incarcerated

Members of Native American tribes

If you do not have insurance and do not fit into one of these categories, then you will likely pay a penalty..