Next OEP - Clawback / Income Projection NIGHTMARE

[AllenChicago]

the average penalty due when preparing taxes was $172.

@ 1% of MAGI household income over the tax filing threshold (about $10k), that means about $27,200 of income on average.

Looks like the average person being hit by penalties are those in lower income brackets, the people this law was designed to help.

Supremely excellent point Ray!

 

[FLM2]

Supremely excellent point Ray!

I don't agree with that assumption at all.

An average of $172 per year is less than $15 per month-when you consider all of the additional benefits received by those below 250% FPL that is an irrelevant sum.

Compare that to someone in the 400% FPL range who could go from a $3,000 subsidy to $0 for $1 in income and it pales in comparison.

That isn't to say the system doesn't stink (it does), they should eliminate all of this clawback nonsense (and the enormous costs to administer it on both sides) by using the last filed tax year as the basis for subsidies.

 

[junkman]

They need to get rid of the penalty and leave the choice to purchase or not up to the individual.

Right. I know all of 0 carriers that will write guaranteed issue without pre-ex when participation isn't required.

 

[sman]

What is everyone else seeing? What's the biggest clawback you've heard of so far, or refund? Chickens meet roost. Nasty tax surprise for Obamacare customers Those average repayments range from $667 for the lowest income group to a high of $1,380 for people just under the 400 percent of poverty level. And the refunds range on average from a low of $412 to a high of $1,601, within the income bands.

Biggest I have seen personally is nearly $6,000. They decided to take a large distribution from their IRA to pay off their house.

They called me last month as soon as they left their CPA's office to let me know. I asked if they earned a good bit more than they initially estimated. That's when they told me about the withdrawal from the IRA. Funny thing is, the husband has been against ACA from the beginning and she was all for it. Now she's complaining about it.

This is just another reason I'm considering not doing on-exchange business any longer.

 

[rugerred]

I got an email from a client yesterday, saying she has gotten 3 calls from Healthcare.gov about sending in her income verification. She has sent it twice, and they went in changed her subsidy. I went into the account and yes they canceled her plan as of March 31 and granted a SEP for a plan starting p April with a different subsidy.

.

 

[RayNY]

I don't agree with that assumption at all.

An average of $172 per year is less than $15 per month-when you consider all of the additional benefits received by those below 250% FPL that is an irrelevant sum.

Penalty, not clawback.

Sorry for being slightly off topic, Yagent's post reminded me of the report I read which was the only thing I've seen that reported the average penalty.

H&R Block: Taxpayers Following ACA Rules, Refunds Take a Hit | H&R Block Newsroom

They also report clawback figures in the same ballpark as the report Yagents cited.

 

[AllenChicago]

April 15, 2015

The WSJournal is implying that some ObamaCare purchasers are cancelling their 2015 coverage because the clawbacks ate up their tax refund. Or, because they purchased off-exchange, thinking that they could claim the subsidy at tax-time, only to find out that off-exchange disqualified them from claiming the Advanced Premium Tax Credit at tax prep time.

Story: Health-Care Law Trips Up Some at Tax Time - WSJ

I've not had or heard of anyone cancelling their coverage due to the subsidy fiasco, but it seems somewhat plausible, considering how expensive un-subsidized coverage can be. How about you all? Any cancellations due to anger or frustration related to the APTC?
ac

 

[RayNY]

AC,

I haven't heard of anyone dropping their plan due to a clawback.

Then again, I can't really comprehend how someone gets their tax refund in advance and decides that's such a bad thing they'll forego health insurance and incur a penalty just to make it stop.

Most people would pay extra money just to get their refund earlier. Heck, H&R Block charges $35 to advance your refund just a few weeks, and people pay it!

 

[taterpeeler]

I have had at least one blow out due to it..

 

[aikenhealth]

I have had several people come to me looking for ANYTHING to cover them but Obamacare for 2015 due to the shock of a sudden subsidy repay bill they just discovered - mainly self employed people - a 2015 "tax fine" would be far lower than the thousands they now owe the IRS