Some families who signed up for Obamacare and have been estimating what their tax returns are going to look like this year are in for a rude awakening.
Due to mid-year income levels changing, nearly 50% of people who received an advance payment of the tax credit for Obamacare will have to repay some or all of the tax credit in question. From CNBC:
Half of the households that received federal subsidies to help pay for their health insurance in 2014 will have to repay some money back to the government when they file their tax returns, a new analysis released Tuesday estimates.The average repayment owed by those people will be $794, the Kaiser Family Foundation study found. The repayments will be owed because those households’ actual incomes ended up being higher for the year than what they had estimated when they applied for the subsidies.
But it gets worse for some families:
But the Kaiser study also found that a relatively small group of households will owe back a lot more than the average when it comes to refunds, after their actual incomes ended up being too high to qualify for the subsidies they got.That group of people will have an average repayment of between $2,306 and $3,837—and some could owe much more. Unlike people who earn below 400 percent of the federal poverty line, higher earners have no limit on the subsidies they must pay back if they were not entitled to them.
This is one of those nasty secrets of Obamacare that Nancy Pelosi and company must not have read about even after passing it.
The political implications of this are not yet known, but once this hits it is going to affect a lot of people. The Full Kaiser Family Foundation study can be found here. They have estimated the following:
There is no definitive data yet on the number of people who received premium tax credits during 2014 and will be required to reconcile those tax credits based on actual income on their tax returns.As of the end of open enrollment for 2014, 6.7 million people selected a plan and qualified for premium tax credits through a state or the federal Marketplace. That figure may be over-stated because not all of those people paid their premiums and actually ended up receiving advance tax credits, though it may also be under-stated because additional people qualifying for special enrollment periods signed up throughout the year. The Treasury Department has estimated that three to five percent of all taxpayers received advance premium tax credits in 2014. Based on an estimated 150 million returns filed, that would translate to 4.5 to 7.5 million tax households receiving advance payments of the premium tax credit in 2014 (with some households including more than one person).
Emphasis is mine. While the numbers could fluctuate it is going to be in the millions.
The chart below shows the amounts people will have to repay. While for some it will be less than $50, there are some who will be paying between $2000-$5000 back to the government.
As the layers get peeled back, it becomes more and more apparent just how badly Obamacare was written and rolled out. The consequences of not knowing what was in the bill when it was passed are being felt by a lot of people. This is why the administration and Democrats have shifted from their “affordable health care” rhetoric to merely talking about the number of those with “insurance.”
Every day we are seeing evidence that the Affordable Care Act is anything but affordable.
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