One of the threads we’ve been following in this blog is the impact of the Affordable Care Act (the ACA or ObamaCare) on taxes.
Last spring, we discussed delays in tax refunds to many people who received tax subsidies to buy health insurance under the ACA. The delays related to difficulties in estimating income in order to receive ACA tax credits. We wrote about this in our April 30 post.
In today’s post, we will inform you about another significant problem regarding the ACA and taxes: the risk of losing your health insurance subidy because you didn’t file a tax return or submit the proper form for ACA subsidies along with your return.
The number of people affected is large. According to the IRS, about 710,000 people who got subsidies under the ACA didn’t file returns this year. Another 760,000 taxpayers who got subsidies did file returns, but didn’t include the required form.
That form — Form 8962 – is viewed with dread by many taxpayers. A woman in Missouri who was quoted in the New York Times said the form is so difficult to understand it is “enough to make you cry.”
If you didn’t file a tax return or didn’t include Form 8962 with your return, you could lose your ACA subsidies in January. Losing the subsidy could also happen if you did not file your return until this fall (perhaps because you received an extension). This is because information from returns filed this fall may not be accessible to health insurance exchanges in time for the beginning of the next enrollment period.
If you are at risk of losing the ACA subsidy, the issue isn’t only that you may have to pay the full premium for your health insurance. There is also the issue of the IRS potentially trying to recover some of the subsidies it paid out to you in 2014 so you could get insurance.