Do you have income tax filing problems that could jeopardize health insurance tax credits in 2016?
1.8 million households that got financial help for health insurance premiums in 2015 must quickly take action to file returns or fix tax issues in order to receive premium payment help next year.
Many Americans receive health care credits to help pay their monthly private health plan premiums. U. S. Treasury officials estimate 1.8 million households are at risk of losing subsidies in 2016. Why? Because these consumers are required to file tax returns that properly account for the health care credits. The good news for those who act quickly is that there is still time to resolve tax issues to be eligible again for credits in 2016.
The Affordable Care Act of 2010 provides tax credits to help people afford private insurance. Nationally, that aid averages $272 a month and roughly covers two-thirds of the premium, according to the IRS Commissioner letter in July. That is about $3,400 per year.
Confusion has been the result for many consumers about the complicated connection between health insurance and income taxes. The Treasury Department estimates 40 percent of 4.5 million households still must account for their tax credits. The rest had their returns successfully processed as of the end of May.
What are the reasons some consumers still have tax issues?
- About 710,000 households have not filed a 2014 tax return, even though they are legally required to account for the health insurance tax credits they received. Even if their incomes are low and they otherwise are not required to file a tax return, they now need to file to account for health care tax credits.
- About 360,000 households that got tax credits and requested an extension have until October 15 to file their returns.
- About 760,000 households that got tax credits omitted a new form, Form 8962, that is key to accounting for the subsidies.
Also look for related articles published by Michigan State University Extension on ways to manage your health care costs to save money: reasons to have health insurance (Part 1), estimating total health care out-of-pocket expenses (Part 2), and special health savings accounts (Parts 3 and Part 4).
Michigan State University Extension provides education about health insurance basics, including the why, what and how for making a smart decision. Find out about Smart Choice: Health Insurance and factual information online.