A majority of Obamacare customers who received government subsidies last year to get covered on state and federal health exchanges must pay back a portion to the IRS, according to an H&R Block study released Tuesday.
The tax-prep giant also said the average tax penalty for not holding insurance under the law’s “individual mandate” is $172, or larger than the $95 baseline fee that got a lot of attention in the early going.
Six weeks into tax season, H&R Block said 52 percent of customers who took advantage of a subsidy underestimated their income for 2014 and had to pay back an average of $530, decreasing their tax refunds an average of 17 percent.
This tax season marks the first time filers must document their health-coverage status. Those who received tax credits to help them pay their premiums must reconcile their actual income with their amount of subsidy, and some will have received too much or too little.
“The level of payback of the Advance Premium Tax Credit is significant in that it’s costing taxpayers a large percentage of their refund — a refund many of them count on to pay household expenses,” said Mark Ciaramitaro, vice president of H&R Block health care and tax services.
About one third of clients overestimated their income and will receive $365 back, on average, from the government.
An Obama administration official said late Tuesday that those getting money back are getting “the actual refund they deserve.”
The official also said it is “misleading” to say those remitting funds to the IRS are seeing their refund reduced, “when in fact folks are working to get their accurate refunds.”
H&R Block says it predicted that many of its customers would not accurately estimate their 2014 household income. Many used their 2012 income ahead of Obamacare’s first open enrollment period, which began in fall 2013.
Last Friday, the administration said about $800,000 people received the wrong data on tax forms from HealthCare.gov, the federal marketplace that serves 37 states.
The forms used the wrong benchmark plan by which subsidies are calculated, so the administration is sending out new forms by the first week in March and asking people to delay filing their returns until they have accurate data.
The administration also announced that people who pay a penalty for lacking insurance in 2014, yet missed the Feb. 15 deadline to sign up for health coverage under Obamacare, can enroll between March 15 and April 30 to avoid an even heftier fine in 2015.
H&R Block said nine of 10 people claiming exemptions from the penalty did so on their tax returns — many from those who did not make enough money to be subject to the mandate.
The company said its data suggests taxpayers are being truthful and paying the tax penalty for being uninsured.
“We don’t think they are just checking the box that they are covered when they’re not,” Mr. Ciaramitaro said.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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