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Providing Obamacare Financial Help Difficult Due to Error by Filers

Under the Affordable Care Act, eligible individuals and families with low or moderate income that cannot afford to purchase healthcare through the Health Insurance Marketplace can use the premium tax credit (PTC) to pay for health insurance. This refundable credit is received in advance. However, those claiming this credit are required to file a tax return.

health-insuranceMany of the people, roughly 1.4 million households, who claimed the PTC on their tax return for 2014 failed to comply with the required rules. This has created a problem in providing financial help to those individuals and families. In the absence of financial aid, they risk going without health coverage. abc News discusses:

“IRS said that more than 1.4 million households that have failed to properly account for their 2014 tax credits include:

—About 316,000 households that got tax credits paid to them in advance but did not file any return at all last year. Before the health care law, many low-income people were not required to file taxes. Now they must do so if they got a subsidy. But if taxpayers don’t realize it, that can create mix-ups.

—Some 976,000 households that got tax credits and filed 2014 returns, but omitted a new form that is the key to accounting for their subsidies. Called Form 8962, it was introduced for the 2015 tax-filing season.
—About 147,000 households that had requested extensions to file their 2014 taxes, but never followed through.
The consumers with tax issues represent about 30 percent of the 4.6 million households that had tax credits provided on their behalf.

“‘We expect that taxpayers will continue to better understand this process as it becomes routine,’ IRS Commissioner John Koskinen said Friday in a letter to Congress. ‘We are committed to learning from this experience so that we can improve our processes and enhance the support we provide in the future.’

“Friday night, a Treasury spokeswoman said that for this year, the IRS will only flag people who do not file a return at all to have their tax credits turned off. Nonetheless, the spokeswoman said it is important for all individuals to file the proper tax paperwork.

“Starting early last summer, the IRS launched a large-scale effort to reach taxpayers who had potential health law issues. Results have been mixed.

“Under the health law, virtually all Americans are required to carry insurance and the uninsured face fines if they can afford coverage. Treasury said that compliance was simple for about three-fourths of taxpayers: All they had to do was check a box.

“But nearly 8 million uninsured individuals and families paid penalties averaging about $210 each. Of those about 313,000 were low-income people legally exempt from the coverage requirement. They will be able to get their money refunded by filing an amended return.

“The Obama administration said this week that 11.3 million people have enrolled for 2016 coverage with three weeks still left in the health law’s sign-up season. But a major independent survey showed that progress reducing the number of uninsured Americans under the law stalled last year, so every customer counts this time around.

“Administration officials do not believe tax problems will have a major impact on this year’s enrollment.”