Half would owe IRS for ACA subsidies at tax filing

March 24, 2015

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.