Oops: Obamacare Enrollees Forced To Unexpectedly Pay IRS For Billions in Subsidies Agency Improperly Gave Away

Katie Pavlich
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Posted: May 15, 2015 9:30 AM
Oops: Obamacare Enrollees Forced To Unexpectedly Pay IRS For Billions in Subsidies Agency Improperly Gave Away

Put this under the "never ending Obamcare glitches" category. 

The Senate Permanent Subcommittee on Investigations is looking into why the vast majority of H&R Block customers enrolled in Obamacare are being forced to pay the IRS hundreds of dollars after filing their tax returns. More from Fox News

Committee investigators also point to an analysis by H&R Block that found almost two-thirds of its filers receiving an ObamaCare tax credit owed the government at the end of the year. On average, those filers were required to repay more than $700 of their ObamaCare subsidies. The study found most customers claiming the credits were confused about the requirements.

ObamaCare offers eligible consumers government-funded tax credits to buy insurance on exchanges. The federal government sets the amount based on a recipient's stated income, family size and whether an applicant's job offers health coverage. Generally, the health care law offers larger subsidies to those earning less, and with larger families. If a customer finishes the year earning more than they stated on their ObamaCare insurance application, the law requires them to repay a portion of the credit.

After billions of dollars have been "invested" in the Obamacare sign up system, we're still seeing years later that the system is confusing and broken. 

This news comes just one month before the Supreme Court will announce whether Obamacare subsidies in states without federal exchanges are legal under the law in King v. Burwell.

The ACA’s statutory language seems to limit federal subsidies to people enrolled “through an Exchange established by the State under section 1311,” the ACA section directing states to establish health exchanges. The statute makes no mention of subsidies for enrollees on the federal exchanges authorized under a different ACA section, 1321. The plaintiffs in the case argue that this is no accident: Congress, they maintain, intended to encourage states to create their own exchanges by offering subsidies only to state-created exchanges.

If the Supreme Court rules Obamacare subsidies in states without federal exchanges are essentially illegal, Obamacare enrollees will no longer receive those subsidies. It isn't clear whether they will have to pay back subsidies already received under proper income requirements.