Tax-filing problems may threaten health law aid for 1.8M

Associated Press

WASHINGTON

About 1.8 million households that got financial help for health insurance under President Barack Obama’s law now have issues with their tax returns that could jeopardize their subsidies next year. Administration officials say those taxpayers will have to act quickly.

“There’s still time, but people need to take action soon,” said Lori Lodes, communications director for the Centers for Medicare and Medicaid Services, which runs HealthCare.gov.

The health care law provides tax credits to help people afford private insurance.

Nationally, that aid averages $272 a month, covering roughly three-fourths of the premium. By funneling the aid through the income-tax system, Democrats were able to call the overhaul the largest middle-class tax cut for health care in history. But they also spliced together two really complicated areas for consumers: health insurance and taxes. Confusion has been the result for many.

Consumers who got health care tax credits are required to file tax returns that properly account for them, even if they are unaccustomed to filing because their incomes are low. Unless they follow through, “they will not be able to receive tax credits to help lower the cost of their health insurance for 2016,” Lodes explained.

Treasury officials said 1.8 million households are at risk of losing subsidies for next year.

The 1.8 million households with tax issues represent 40 percent of 4.5 million households that had tax credits provided on their behalf and must account for them.

The rest had their returns successfully processed by the IRS as of the end of May.