Tax season is bringing an unwanted jolt to people who bought health insurance plans through Affordable Care Act exchanges in 2014 and now find themselves owing the IRS hundreds or thousands of dollars to repay federal subsidies that came with their coverage, CNBC reports.
Obamacare customers who got subsidized coverage based on their estimated income are now staring at tax bills for part or all of the subsidy because their actual income turned out to be higher.
One retiree told CNBC he was “shocked” to learn he is on the hook for the entire subsidy — $6,624 — that covered the bulk of the plan he bought through HealthCare.gov.
“I wasn’t very happy,” said retired U.S. Airways flight attendant Mike Highsmith, 61, who said he didn’t realize his plan was subsidized until after he had done his taxes and discovered that a one-time boost in his income — an early 401(k) withdrawal — completely erased his eligibility for subsidies.
The cutoff for subsidies is at incomes higher than 400 percent of the official U.S. poverty rate, and one tax expert said that going over that amount by even a dollar can result in an IRS bill for thousands of dollars.