As many as 95 percent of Americans will need to reconcile the advance premium tax credits (APTCs) they received to obtain health insurance in 2014, and the average amount of money in question is close to $775, according to a new issue brief from the Kaiser Family Foundation (KFF).
The credits, first offered under the Affordable Care Act for the 2014 tax season, are estimates based on an individual's projected income for the year and must be reconciled based on actual income reported when individuals file their taxes. Anyone with an annual income within 400 percent of the federal poverty level is eligible for the APTC. Enrollees receive an advanced payment because it is unlikely that they would otherwise be able to afford insurance, KFF said.
However, actual income can vary greatly from estimated income. Hourly workers, seasonal employees or even salaried workers who receive bonuses may estimate incorrectly. Losing a job or getting a new job can also alter estimates.
As a result, the vast majority of households who received a tax credit will need to reconcile it when filing their taxes, KFF found. Half of households eligible for APTCs in 2014 owe the government; the average repayment amount is $794. On the other hand, 45 percent will receive a refund; the average amount if $773.
KFF estimated that 3 to 5 percent of all taxpayers received APTCs last year, which comes out to 4.5 million to 7.5 million tax households receiving APTCs. By the end of open enrollment for 2014, 6.7 million individuals had purchased and qualified for subsidized coverage through both the state and federal marketplaces. However, not all of those individuals paid their premiums and ended up receiving APTCs, noted KFF.
KFF estimated in November 2013 that as many as 17 million Americans could be eligible for tax credits, FierceHealthPayer previously reported.
- here's the issue brief