Tax Refunds Cut For ObamaCare Recipients
Christl Leong | | Sep 22, 2014 10:17 PM EDT |
(Photo : REUTERS/Lucy Nicholson) A man explains ObamaCare at a health insurance enrollment event in Commerce California, March 31, 2014.
One of the advantages of the Affordable Care Act (ACA), commonly known as ObamaCare, is the opportunity to receive tax credits upfront to save on overall health insurance costs. Now, thousands of ObamaCare recipients may actually be liable to pay back a portion of that tax credit next year, according to USA Today.
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Affected ACA recipients who took advance payouts on the premium tax credits for health insurance may end up owing money and paying them back next April.
Basically, the Internal Revenue Service (IRS) checks the actual income the individual has earned for the year and compares it with the estimated amount entered in the application for exchange-based health insurance under the health insurance law.
The Centers for Medicare and Medicaid Services on Monday said that over 279,000 households filed tax returns with incomes that don't match what the government has on file.
The next enrollment period opens on Nov. 15.
Notices to affected ObamaCare consumers whose incomes don't tally with government records such as 2012 tax returns were sent out this week.
"Health insurance is confusing enough," said Michigan Association of CPAs member Lorena Bencsik. "And now they're adding the complexities of the Tax Code."
Mark Steber, chief tax administrator at the Jackson Hewitt Tax Service says the best way to avoid tax-time problems would be to realize when changes in income and other life changes occur and report them throughout the year.
However, Kaiser Family Foundation fellow Karen Pollitz said most of those eligible to receive tax credits do not have regular day jobs so estimating one's salary for the coming year can be tough.
Families and individuals with incomes ranging from 100 to 400 percent of the federal poverty cap and obtain health insurance coverage in the marketplace in their state are eligible to receive tax credits. The actual amount of the credit would depend on income, age, family size, and location of residence.
Some life changes the IRS needs reported include changes in income and marital status, the adoption or birth of a child, whether a current job offers health insurance, and whether there is a change in individual status for eligibility of a certain healthcare coverage.
The Kaiser Family Foundation has a free on-site calculator to help compute likely tax credits.
TagsAffordable Care Act, ACA, Obamacare, health insurance, premium tax credits, Centers for Medicare and Medicaid Services, IRS
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