Many Americans owe IRS for health insurance subsidy overpayments
Many people who received subsidies to help pay for their Affordable Care Act policies in the form of tax credits will find that they owe some of that money to the government during tax season, and others are facing stiffer penalties for remaining uninsured.
Since the ACA plan subsidies are based on income, those who underestimate their income must pay back the government come tax season. Tax preparation company H&R Block says that so far this tax season, 6 in 10 of its customers have had to pay back a portion of their healthcare subsidies, with the average payment $579, according to the Wall Street Journal. In 2014, the average payment was $530, the article states.
Many Americans also risk losing their subsidies by failing to account for them on tax returns, FierceHealthPayer has reported.
H&R Block says some customers are still confused about why they have to pay back the government, the Associated Press reports. "Even the people going through it a second time weren't getting any better at it," said Mark Ciaramitaro, the company's vice president for taxes and healthcare.
That said, the AP article notes that more than 1 in 3 Americans receiving subsidies actually overestimated their incomes, meaning that they received a smaller tax credit than they were entitled to, and H&R Block says that they got an average of $450 back from the IRS.
In addition, the AP article says, the average fine paid by H&R Block customers without health insurance this tax season has more than doubled from $383 for 2015 compared to $172 for 2014. Though the fine has increased significantly this year in accordance with ACA regulations, some still see paying the penalty as cheaper than signing up for health insurance.
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