Tax Credit and Filings
The first tax season is behind us and no one knew what was going to happen with tax credits. The Federal Marketplace compared what was reported on the tax credit application and what the individual filed on their tax returns.
It was estimated that 45% of the people that purchased health insurance with tax credits, would have to pay a portion of the credit back. The average repayment is around $800 for the country.
A lot of people that had to repay a portion of the tax credit fell into a couple of different situations. Commission Sales people seem to be in a situation where they had to repay. Unemployed Hoosiers, that found employment, forgot to notify the exchange about a change in circumstance. There has also been a lot of confusion over Social Security benefits.
The problem with the new tax credit system, is there is nowhere to get answers for complicated situations. The IRS, will refer you to different sections of the IRS code. The health insurance market place employees, have very little to no training on tax issues. If you have a complicated situation there is very little help.
For 2015 enrollments, we were able to recognize some of these situations in advance. We advised our clients not to take the entire tax credit up front. This is a very difficult decision for some people to make. Premiums are extremely high, so without taking that full tax credit, it can be affordable. For some Hoosiers, that knew they were going to have income changes, they did go with this option. Some even choose not to take any tax credit until they file their 2015 taxes.