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Why Getting a Raise Could Be a Negative for Some Obamacare Users This Tax Season


“This is a consequence of Obamacare using the tax system to help low income families buy insurance.”

This Oct. 15, 2014 file photo, a screen shot shows the home page of HealthCare,gov, a federal government website managed by the U.S. Centers for Medicare & Medicaid Service. Sign-ups under President Barack Obama’s health care law surged last week, driven by a deadline for getting covered by Jan. 1, officials said Tuesday. Unlike last year, the HealthCare.gov website was working well. (AP Photo)\n

What Obamacare gives, it can take away – at least if you got a pay increase over the last year.

About half of subscribers who received federal subsidies to buy private insurance plans will owe an average of $794 in repayments, according to an analysis by the nonpartisan Kaiser Family Foundation released Tuesday. The repayments come if a subsidy recipient’s actual income was higher than their projected income.

“If you are low-income, having to pay any increase on taxes is a hardship on people,” Cynthia Cox, Kaiser Family Foundation associate director and lead author of the study told TheBlaze. “Even if your income goes up over the year, some people don’t realize they are receiving subsidies and would be surprised they have to pay back so much.”


The study found that some taxpayers would have to pay back nearly $4,000 if their income rose out of the poverty level entirely, using projections for the first tax filing year after Obamacare subsidies were available. Nearly half, or 46 percent, of those making repayments would owe between $200 and $1,000 to the government.

“This is a consequence of Obamacare using the tax system to help low-income families buy insurance,” Cox said.

The Kaiser study, titled “Repayments and Refunds: Estimating the Effects of 2014 Premium Tax Credit Reconciliation,” comes the same week the Obama administration marked the fifth anniversary of the Patient Protection and Affordable Care Act.

Under the law, households with incomes of up to four time higher than the federal poverty level are eligible for subsidies. The federal poverty level for 2013 was $11,490. But someone making up to $45,960 could also get federal subsidies from the Department of Health and Human Services to assist in purchasing plans on the Obamacare exchange. If someone's incomes is higher than projected, or increases during the year, the household would have to repay at least some of the subsidy.

Though 50 percent of those getting subsidies would have to repay the government, another 45 percent of those getting subsidies are projected to get refunds, which will be on average $773. The bulk of refunds issued – 42 percent – would be between $200 and $1,000, according to Kaiser.

The number receiving subsidies has not been determined, but is estimated between 4.5 million and 7.5 million, Cox said.

An HHS spokesperson did not respond immediately to inquiries from TheBlaze about the findings. An Internal Revenue Service official told TheBlaze that because this is the first tax filing year for health care subsidies, there would be no way to confirm the Kaiser findings and said the agency did not want to speculate.

When people sign up to buy an Obacmacare plan on healthcare.gov or the state marketplace, they fill out what they anticipate their income being over the next year, which can sometimes be hard to predict, Cox said.

“For those owing a few thousand, they may have made enough in their increased income to be able to swing it, but it might still comes as a surprise,” Cox said.

Someone signing up for Obamacare with an income earning up to twice the federal poverty level – $22,980 for an individual – would have the lowest repayment level with an average payment of about $667, but some could get an average refund of $412.

A household earning between $34,470 and $45,690 – or between three and four times higher than the poverty level – would face an average repayment of $1,380, or an average refund would pay $1,601.

For those who earn more than $45,690 by the end of the year, the repayment could be between $2,306 to $3837, depending on their projected income.

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