Monday, September 22, 2014

RTF Subsidy Q

I was recently asked by an acquaintance whether I knew anything about the ObamaCare "clawbacks" (his term). Seems he had been looking into buying an Exchange-based plan, but was concerned that, if he misstated his income, some or all of his subsidy could be "clawed back" (confiscated) by the government.

We've been blogging about this for a long, long time (here, for example). And I suppose it's gratifying that the Lamestream Media is (finally) also glomming onto it. From yesterday's McPaper:

"[N]ow hundreds of thousands of consumers could owe back some of that money next April."

At issue is the challenge that the subsidy calculator is predicated on one knowing (relatively precisely) how much income one will have in the next year. Guess wrong, and you could be short-changing yourself and your family, or owe some or all of that sweet, sweet subsidy money back to the Feds.

So how to avoid this? Well, the folks at the McPaper advise that one "report changes in income and other changes in one's life, such as a marriage, throughout the year." And where should one report these changes?

You guessed it: the still-dysfunctional site. Rotsa ruck with that!

But what really caught my eye was the article's headline:

"Tax refunds will be cut for ACA recipients"

But the article itself says no such thing. The only clue it gives is this:

"When you file that 2014 tax return next year, the Internal Revenue Service will compare your actual income for the year with the amount you estimated ... if the income is 400% or more above the poverty line, there is no cap and the taxpayer must pay back the full amount."

Okay, but how does that gibe with the headline?

We know that failure to buy an ACA-compliant plan will result in a fine penalty tax, but the IRS is limited as to how to collect it. Similarly, there's little guidance available about how - or even whether - the IRS can go after these subsidies.

So I reached out to Susan Tompor (the author), and asked her if there was some reason that the article didn't actually address the headline, and if she had any additional light to shed on the topic.

To her credit, she responded almost immediately.

To her shame, here's that response:

"See or [sic]."

Very helpful there, Suzy.

Oh, here's what I told my acquaintance:

I believe that the potential forfeiture of any subsidies is the least of the ObamaTax's problems. Between the potential for Identity Theft at the site, the narrowing of networks and tightening of prescription benefits, and the excessive cost (both in premiums and exposure) of ObamaPlans, having an interest-free loan to help pay those premiums seems like a #firstworld problem to me.
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