Business

Affordable Care Act cut tax refunds $729, H&R Block says

Tax refunds were on average $729 smaller for about two thirds of filers who received help under the Affordable Care Act, H&R Block Inc. said Monday.
Tax refunds were on average $729 smaller for about two thirds of filers who received help under the Affordable Care Act, H&R Block Inc. said Monday. Associated Press

Two out of three taxpayers who got help from Uncle Sam to buy health insurance last year owed some of that money back come April 15, according to H&R Block Inc.

The Kansas City-based tax preparation firm reported its customers’ experiences under the Affordable Care Act and the just completed tax season on Monday.

The health care law commonly called Obamacare helped pay part of the medical insurance premiums for those who qualified. The amount of the help was based on what the taxpayer had expected to earn during 2014.

Those who earned more than they had estimated had to return some of the premium help at tax time. H&R Block said that turned out to be nearly two-thirds of those who got help.

Repaying Uncle Sam meant getting a smaller tax refund, Block said, on average a $729 smaller refund. Block said that amounted to about a third of the average refund for filers who gained health care coverage under the Affordable Care Act.

Block, in an announcement, said its “figures highlight the importance of estimating income as accurately as possible” when seeking benefits under the Affordable Care Act.

It said taxpayers also need to keep that estimate updated throughout the year to reflect changes in their income and household size. Such changes can raise or lower the level of premium help available and subsequently the taxpayer’s refund.

In February, H&R Block had said about half of taxpayers with premium assistance under the Affordable Care Act were seeing smaller refunds. Its report Monday updated that for the entire tax season.

About one in four taxpayers covered by the Affordable Care Act got larger refunds because they had overestimated their earnings, Block said. Their refunds averaged $425 larger, or about 18 percent more, because of the calculations to reconcile their health insurance premium benefits under the health care act.

The larger refund meant that they would have qualified for more help paying their medical insurance premiums during the year than they had received.

Taxpayers who failed to secure health coverage last year paid an average $178 penalty on their taxes, H&R Block said it found. The law said the penalty would be either $95 or 1 percent of income.

Block said more taxpayers will encounter the Affordable Care Act when doing their taxes in early 2016. This spring, only those who purchased health care coverage on the government exchanges received, and had to include in their tax filing, documentation showing they had coverage. All filers will next year, Block said.

The penalty for not having coverage this year increases to $325 or 2 percent of income, whichever is larger, the tax preparation company said.

To reach Mark Davis, call 816-234-4372. Follow him on Facebook and Twitter @mdkcstar.

  Comments