Americans who think they’re benefiting from health insurance subsidies under Obamacare could end up having to repay that money when the next tax season rolls around.
Unless they’re lucky enough to stay poor.
According to a Politico report, the Obamacare provisions that provide subsidies for Americans making less than 400 percent of the poverty level have a boomerang effect if the recipients manage to improve their financial condition over the course of 2014:
They’ll end up owing the IRS money for the tax credits that were paid out for insurance premiums they received when times weren’t so good.
“If I were the IRS, I would be very concerned that I’m going to be viewed as the villain when people have to pay back money the government gave them for health insurance,” Chris Condeluci, a former tax counsel for Republicans on the Senate Finance Committee.
The nut of the problem is how recipients can choose to accept Obamacare subsidies. That can be either during the year when the premiums have to be paid – which tax experts say most people are expected to do – or at the end of the year as reimbursement from the government.
If the subsidies are paid in advance, and life changes occur that would normally benefit the recipient – getting married, getting a better job, getting more paid working hours – the recipient might end up owing money to the government because they would no longer qualify for the entire subsidy.
For Americans who get their insurance through employers, those changes are usually taken care of by the company’s bookkeeping. For those relying on Obamacare, the changes must be reported by the individual – and if they don’t, it could mean paying a big price at tax time.
It’s a perversity of dependence Obamacare fosters. Things generally considered beneficial – getting married, having a baby, getting a raise – could turn into liabilities for those who improve their circumstances unless every change is faithfully reported to the government overseer.
And if the recipients are the industrious kind who want to earn more money honestly, it could just mean more trouble.
“People in lower-income families may be working one or two jobs, or picking up shifts,” Consumers Union policy analyst Lynn Quincy told Politico. “If there comes an option to make more money, they’ll take it.”
In an Obamacare world, that’s a bad thing.
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