Many Confused By Tax Filing Requirements Could Lose ACA Tax Credits

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Just because the Republican Party pretends to hate the Affordable Care Act, that doesn’t mean progressives should pretend it’s a great law. ‘Obamacare is a win for the 1 percent,’ writes Kolhatkar, ‘and a loss for the rest of us.’ (Photo: National Nurses United/flickr/cc)

About 1.8 million households that got financial help for health insurance under President Barack Obama’s law now have issues with their tax returns that could jeopardize their subsidies next year.

Consumers who got health care tax credits are required to file tax returns that properly account for them, even if they are unaccustomed to filing because their incomes are low. Unless they follow through, “they will not be able to receive tax credits to help lower the cost of their health insurance for 2016,” Lodes explained (Lori Lodes, communications director for the Centers for Medicare and Medicaid Services).

Treasury officials said 1.8 million households are at risk of losing subsidies for next year, and that number breaks down as follows:

  • About 710,000 households that have not filed a 2014 tax return, although they were legally required to account for health insurance tax credits that they received.
  • Some 360,000 households that got tax credits and requested an extension to file their returns. They have until Oct. 15.
  • About 760,000 households that got tax credits and filed their tax returns omitted a new form that is the key to accounting for the subsidies. Called Form 8962, it was new for this year’s tax filing season.

The 1.8 million households with tax issues represent 40 percent of 4.5 million households that had tax credits provided on their behalf and must account for them.

“What the IRS is doing here is sending these people a not-so-gentle reminder that they need to file or they will put their subsidy at risk,” said Mark Ciaramitaro, vice president for tax and health care at H&R Block, the tax preparation company. He cautioned that many consumers will find the process cumbersome, so they should waste no time getting started.



By Don McCanne, MD

Forty percent of the 4.5 million households that received tax credits in 2014 for the health plans offered in the ACA exchanges have failed to complete the tax filing requirements for these credits and thus will be ineligible for tax credits for 2016, unless they follow through with their delayed filings.

In a health care system already heavily burdened with administrative excesses, it is unfortunate that the Affordable Care Act significantly increases the administrative burden. In this instance, the additional hassle of the tax filing requirements for those receiving subsidies under ACA may be confusing enough that many may fail to file correctly, and thus they may become disqualified for tax credits to which they are entitled and which many need just to be able to afford the premiums for the exchange plans.

Many of ACA’s provisions and regulations apply specifically to individuals and families, creating sometimes complex administrative requirements in each individual case. In contrast, a single payer system requires simple registration only once in a lifetime, and the financing requires nothing more than compliance with the existing tax system, with rates set based on ability to pay.

For the individual, a single payer system is hassle-free, whereas for the entire nation, single payer frees up enough administrative waste to pay for the care that people are not currently receiving but should be.

When we have a financing system requiring IRS rules that can threaten individuals with loss of their health care, we know that the system needs to be changed. Time for an improved Medicare for all.

  • CALynnie

    100% of my tax clients who purchased health insurance on the market and received a subsidy had to pay all or part of it back including those who made less than $20K, were unemployed (unemployment counts as income), received Social Security (counts as income), were in foreclosure, displaced (ongoing displacement from Sandy), or just getting by. If your income was ANYTHInG above the exact federal poverty level for your filing status (a 2013 figures which for single person was $10,500), you were paying something back. Such a sick System. We need Improved and Expanded Medicare for All.

  • Mary Wehrheim

    Yeah…the fly in the punch bowl is the stupid tax stuff. I am on the subsidized ACA until I hit 65 in a couple of years. To get the subsidy you have to be able to guess accurately what your wages will be for that year. You also have to complete a special tax form and if you underestimated the amount you made that year you have to pay the difference in what the subsidy should have been based on your higher salary. This means hiring a tax person…more expense. I paid a couple of hundred for the tax person and $750.00 to the IRS for my miscalculation because of my princely salary for 2014 ended up being around $25,000. So in addition to the tax accountant, add a fortune teller to your list since those of us in my salary bracket have very unpredictable income.