qotd: Many confused by tax filing requirements could lose their ACA tax credits

Associated Press
August 4, 2015
Tax Filing Problems Could Jeopardize Health Law Aid for 1.8M
By Ricardo Alonso-Zaldivar

About 1.8 million households that got financial help for health
insurance under President Barack Obama's law now have issues with their
tax returns that could jeopardize their subsidies next year.

Consumers who got health care tax credits are required to file tax
returns that properly account for them, even if they are unaccustomed to
filing because their incomes are low. Unless they follow through, "they
will not be able to receive tax credits to help lower the cost of their
health insurance for 2016," Lodes explained (Lori Lodes, communications
director for the Centers for Medicare and Medicaid Services).

Treasury officials said 1.8 million households are at risk of losing
subsidies for next year, and that number breaks down as follows:

-About 710,000 households that have not filed a 2014 tax return,
although they were legally required to account for health insurance tax
credits that they received.

-Some 360,000 households that got tax credits and requested an extension
to file their returns. They have until Oct. 15.

-About 760,000 households that got tax credits and filed their tax
returns omitted a new form that is the key to accounting for the
subsidies. Called Form 8962, it was new for this year's tax filing season.

The 1.8 million households with tax issues represent 40 percent of 4.5
million households that had tax credits provided on their behalf and
must account for them.

"What the IRS is doing here is sending these people a not-so-gentle
reminder that they need to file or they will put their subsidy at risk,"
said Mark Ciaramitaro, vice president for tax and health care at H&R
Block, the tax preparation company. He cautioned that many consumers
will find the process cumbersome, so they should waste no time getting
started.

http://hosted.ap.org/dynamic/stories/U/US_HEALTH_OVERHAUL_TAX_CONFUSION

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Comment by Don McCanne

Forty percent of the 4.5 million households that received tax credits in
2014 for the health plans offered in the ACA exchanges have failed to
complete the tax filing requirements for these credits and thus will be
ineligible for tax credits for 2016, unless they follow through with
their delayed filings.

In a health care system already heavily burdened with administrative
excesses, it is unfortunate that the Affordable Care Act significantly
increases the administrative burden. In this instance, the additional
hassle of the tax filing requirements for those receiving subsidies
under ACA may be confusing enough that many may fail to file correctly,
and thus they may become disqualified for tax credits to which they are
entitled and which many need just to be able to afford the premiums for
the exchange plans.

Many of ACA's provisions and regulations apply specifically to
individuals and families, creating sometimes complex administrative
requirements in each individual case. In contrast, a single payer system
requires simple registration only once in a lifetime, and the financing
requires nothing more than compliance with the existing tax system, with
rates set based on ability to pay.

For the individual, a single payer system is hassle-free, whereas for
the entire nation, single payer frees up enough administrative waste to
pay for the care that people are not currently receiving but should be.

When we have a financing system requiring IRS rules that can threaten
individuals with loss of their health care, we know that the system
needs to be changed. Time for an improved Medicare for all.