Filed Under:Health Insurance, Individual Health

PPACA health subsidy could trigger surprise tax bills

When President Obama signed PPACA into law, he created a tax puzzle for some. (AP photo/Charles Dharapak, File)
When President Obama signed PPACA into law, he created a tax puzzle for some. (AP photo/Charles Dharapak, File)

WASHINGTON (AP) — Millions of people who take advantage of government subsidies to help buy health insurance next year could get stung by surprise tax bills if they don't accurately project their income.

The Patient Protection and Affordable Care Act (PPACA) will offer subsidies -- advanced premium tax credits (APTC) -- to help people buy private health insurance on state-based exchanges, if they don't already get coverage through their employers. The subsidies are based on income. The lower your income, the bigger the subsidy.

"They know it's out there," said Mark Cummings, who manages the H&R Block office where Baird was getting her own taxes done. "But in general, they don't know anything about it."

A draft of the application for insurance asks people to project their 2014 income if their current income is not steady or if they expect it to change. The application runs 15 pages for a three-person family, but nowhere does it warn people that they may have to repay part of the subsidy if their income increases.

The subsidies, which are technically tax credits because they are administered through the tax code, will help low- and middle-income families buy health insurance through the state-based exchanges. Under the new law, nearly every American will be required to have health insurance starting in 2014, or face penalties.

The enrollment season starts Oct. 1.

Copyright 2016 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Nichole Morford

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