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Tax mistakes could cost millions of Americans their ACA insurance

Health Care and Health Insurance
by Chris Merkel
U.S. keeps making health insurance gains, but changes loom
U.S. keeps making health insurance gains, but changes loom

One of the biggest issues that many Americans have encountered when buying coverage through the ACA's exchanges is that eligibility is dependent on their incomes and tax filing statuses. That dependency, in turn, can lead to major problems for many enrollees if they make mistakes on their taxes or earn more money than they thought they would at the start of the year.

Now, as many as 1.8 million households across the country that received subsidies from the federal government to help them cover the cost of such coverage could find themselves in serious financial jeopardy, according to a report from the Associated Press. One of the major issues that many face as a result of the requirement that they submit tax documents to prove their income is that they may make mistakes in doing so, and while the Obama administration warns that they still have time to fix those problems, that time is running out quickly. Those who do not amend those issues - which are common because many of these people often make so little that filing taxes is something they don't do very often, if ever - could lose their subsidies for next year.

A look at the numbers
Of the 1.8 million potentially affected households, roughly 760,000 - the largest chunk of people in this group - received tax credits and filed their returns, but did not include the brand new Form 8962 with that documentation, which is now a requirement. Another 710,000 or so simply didn't file their returns at all, while 360,000 more households received extensions on their filings that are now due before October 15.

Experts, though, say a lot of these missteps in the federal government's eyes don't amount to much more than rookie mistakes in a lot of cases, and that the new Form 8962 only complicated matters, the report said. Elizabeth Colvin of Foundation Communities, an Austin, Texas, nonprofit that helps low-income people with health insurance and taxes, told the news agency that, given the new requirement, only having 1.8 million households stuck in this problem now actually wasn't that surprising; in fact, some experts might have expected those numbers to be higher.

Many Americans might not have known what was required of them at tax filing time when it comes to keeping their health insurance subsidies.Many Americans might not have known what was required of them at tax filing time when it comes to keeping their health insurance subsidies.

Still a large number
Regardless, that 1.8 million represents about 2 in every 5 people of the roughly 4.5 million who were required to submit their tax returns, the report said. The other 2.7 million were on time with their filings and have already been processed by the IRS for a few months at this point.

This might be something on which health insurers themselves may want to start working a little more closely with consumers as well, because it behooves all involved to make sure people fully understand coverage requirements, and how they're supposed to submit documents to the federal government. If any mistakes are made in these cases, it could result in people losing their coverage going forward.

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