Half would owe IRS for ACA subsidies at tax filing

Half of all consumers who received advance tax credit subsidies for health insurance in 2014 would have to pay back a portion of them to the Internal Revenue Service (IRS), according to a new analysis by the Kaiser Family Foundation.

Half of all consumers who received advance tax credit subsidies for health insurance in 2014 would have to pay back a portion of them to the Internal Revenue Service (IRS), according to a new analysis by the Kaiser Family Foundation (KFF).

Another 45% would be due a refund due to eligibility for a higher subsidy amount than actually claimed.

The analysis is a simulation based on several data subsets including KFF’s Current Population Survey model.

Under the Affordable Care Act (ACA), tax-premium subsidies are available to low and middle-income consumers to offset the cost of buying mandated healthcare. Subsidies are applied on a sliding scale based on income and can be claimed at the time of enrollment, subject to reconciliation with the IRS at tax filing.

Reasons for owing a repayment for subsidies or being entitled to a larger subsidy amount, and thus a refund, include a change in income and change in family size. KFF only considered the income changes in the simulation.

According to results, average repayments are estimated to be:

  •  $667 for those with incomes less than 200% of the federal poverty level (FPL)

  •  $886 for those with incomes between 200% and 300% of the FPL; and

  • $1,380 for those with incomes between 300% and 400% of FPL.

Average refunds are estimated to be:

  • $412 for those with incomes less than 200% of the FPL;

  • $1,016 for those with incomes between 200% and 300% of the FPL; and

  • $1,601 for those with incomes between 300% and 400% of FPL.

Access the analysis here.