Approximately 1.8 million households that obtained health insurance subsidies under the Affordable Care Act now have issues with their tax returns that could threaten their subsidies next year, according to an Associated Press report published in the New York Times.
The 1.8 million households with tax return issues represent 40 percent of the 4.5 million households that received subsidies.
Under the ACA, the federal government funnels financial aid to eligible recipients through the income tax system. However, the fusion of health insurance and taxes — two notoriously complex areas for consumers — has confused many.
The Obama administration said these taxpayers must file their tax returns promptly. "There's still time, but people need to take action soon," Lori Lodes, communication director for CMS, told the AP.
Those who receive premium tax credits are required to file tax returns, even if they haven't previously because their incomes are low. If they do not file tax returns, "they will not be able to receive tax credits to help lower the cost of their health insurance for 2016," Ms. Lodes said.
The 1.8 million households at risk of losing subsidies for next year can be broken down as follows, according to the AP.
- About 710,000 households have not filed a 2014 tax return, despite being legally required to account for the health insurance tax credits they received.
- Roughly 360,000 households received tax credits and requested an extension to file their returns. These people have until Oct. 15.
- About 760,000 households received tax credits and filed their tax returns left out a new form — Form 8962 — that is integral to accounting for the subsidies.