ACA Healthcare Tax for 2014

The goal of the ACA health care law was to ensure that millions of US citizens would be covered under insurance. Many who signed up did so using federal and state credits and subsidies offered to lower their premiums. However, this may prove to be an issue in the 2014 tax year as Americans are expected to pay back any subsidies they weren’t eligible for. According the Wall Street Journal, “The Obama administration has told more than 300,000 individuals who obtained coverage through the federal site that they may lose some or all of the subsidies if they don’t provide additional income information that jibes with Internal Revenue Service data. That information includes tax returns, wages and tax statements, pay stubs and letters from employers. Hundreds of thousands of people who obtained health coverage through state exchanges also have documentation issues and could potentially be getting subsidies they aren’t eligible for.”

One of the main problems is that individuals who signed up on the federal and state websites were asked to estimate their 2014 income and provide citizenship information. That was then checked against 2012 tax information. Enrollees who had changes in income or didn’t complete the verification process may have to pay back those subsidies when they file their taxes. According to HHS, about 85% of the people who signed up did receive premium subsidies. States that built their own exchanges may have specific requirements of verification as well. If individuals do end up owing, they will be required to write  a check to the US Treasury at time of filing or have their refund reduced by that amount.