Hundreds of thousands of Americans may have lost their ACA healthcare federal subsidies on October 1, if they fail to meet the September 30 deadline to verify their incomes.
Those who wish to retain their insurance but can’t confirm their income will likely have to pay back the Federal government. Some will end up taking a big hit to their tax refund. If their refund doesn’t cover what they owe for health insurance—they will need to cut a check to Uncle Sam.
The average subsidy in 2014 was $4,400 per eligible person, according to the Congressional Budget Office. That could make for a sizable impact in the family budget.
At the moment, it appears that there will be caps on the amount filers must pay back this year, based on household income. Single taxpayers can be liable for repaying up to $1,250, married taxpayers up to $2,500. If your income is 400% or more above the poverty line, there is no cap and you must pay back the full amount.
How Do I Know If I Owe?
Subsidies are aimed at helping people pay for their ACA mandated healthcare insurance. Some ACA subsidies are “premium tax credits” which can be paid directly to your health insurance company to lower the cost of your monthly premium payments upfront. Or you can claim the premium tax credit as a refund on your tax return.
The ACA Marketplace automatically calculates the amount of your subsidy based on family income and other information. If the information you provided is incorrect – or the government thinks it’s incorrect – you may have received more in subsidies than you were entitled to get. And the government expects you to pay it back, ASAP.
It is your responsibility to update your income information when you experience a “qualifying life event.” This is any significant change in your circumstances – such as getting married, having a child, moving to another state, unemployment/new job, or other changes in your health, income or health insurance coverage.
You can call 1-800-318-2596 (TTY: 1-855-889-4325) or go to healthcare.gov and log into your account to report the change. If you don’t report a rise in income you will be expected to reimburse any overpayments the next time you pay your federal taxes.
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