Obamacare Subsidies Are Going to Hurt Half the Recipients

People receiving Obamacare subsidies are about to go through financial pain.

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The point of Obamacare subsidies was that people needed to be helped in order to avoid financial pain. People applied for insurance and filled out their information and were told that the government would be subsidizing what they paid for it.

But it is not quite that simple.

H & R Block has estimated that half of those who received subsidies are going to have to pay some amount of that money back to the government—an expense that will come as a surprise to them. Justin Green at the Washington Examiner reports,

While the Affordable Care Act fines those who don’t have health insurance, it also provides subsidies for people making up to four times the federal poverty line ($46,680).

But the subsidies are based on past tax returns, so many people may be receiving too much, according to Vanderbilt University assistant professor John Graves, who projects the average subsidy is $208 too high, the [Wall Street] Journal reports.

Tax preparers, who frequently advertise their ability to deliver big refunds, have been working feverishly to avoid customer anger stemming from lower-than-expected refunds due to insurance premiums. They also are trying to make sure customers understand the potential fines for not having insurance.

“Eighty-five percent of our customers get a refund,” said Kathy Pickering, who directs the H&R Block Tax Institute, according to the Washington Post. “That refund could be offset by the penalty. And if that happens, they’re going to be understandably angry.”

The fine for not having insurance in the second year of Obamacare is $325 or 2 percent of taxable income, whichever is greater.

[See also, “Hundreds of Thousands Getting Obamacare Subsidies Being Contacted, Questioned.”]

The entire point of the tax refund system has been to fool the public into thinking they are getting a kind of bonus when in fact they are merely getting their own money handed to them without interest. By messing with the tax refund system the Obama Administration is tampering with an important strategy for keeping the populace happy.