Tag Archives: subsidy

Feds Can’t Verify $2.8 Billion in Obamacare Subsidies | Washington Free Beacon

The federal government cannot verify nearly $3 billion in subsidies distributed through Obamacare, putting significant taxpayer funding “at risk,” according to a new audit report.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) released an audit Tuesday finding that the agency did not have an internal system to ensure that subsidies went to the right enrollees, or in the correct amounts.

“[The Centers for Medicare and Medicaid Services] CMS’s internal controls did not effectively ensure the accuracy of nearly $2.8 billion in aggregate financial assistance payments made to insurance companies under the Affordable Care Act during the first four months that these payments were made,” the OIG said.

So what does CMS do when they learn about the control issue (as if they didn’t already have a clue)?

In response to the audit, CMS said they issued a regulation to change their accounting methods.“CMS takes the stewardship of tax dollars seriously and implemented a series of payment and process controls to assist in making manual financial assistance payments accurately to issuers,” they said.

THEY ISSUED AN EFFING REGULATION. Oh yeah, that will fix everything.

A Rube Goldberg law implemented by a Rube Goldberg system. The phrase Keep It Simple Stupid (KISS), never came within light-years of anyone involved with writing or passing Obamacare.



Obamacare and taxes: Full employment for H&R Block

H&R Block Out to Help Americans’ Resolve to Tax Preparation – Video – TheStreet.

If you’re on Obamacare, and especially if you are receiving a subsidy or intend to claim it on your tax return, things just got complicated. No more 1040EZ if you’re in subsidy land.

No doubt, Obamacare is a full employment service for H&R Block and other tax preparation services.


Obamacare subsidy clawbacks commonplace

H&R Block analysis: Most ObamaCare customers paying back portion of subsidies | Fox News.

Too much subsidy:

An analysis by tax-preparer H&R Block found that to date, 52 percent of those who enrolled in Affordable Care Act coverage are paying back part of their premium tax credits.

On average, they’re paying back $530, reducing the average refund by 17 percent.

H&R Block reports that most clients are answering truthfully as to whether they had coverage in 2014, as required by the law. Those who didn’t have coverage are paying an average $172 penalty.


IRS Waives Penalties for Late Payments Linked to Obamacare

Because it’s too complicated – IRS Waives Penalties for Late Payments Linked to Obamacare – Bloomberg.

The U.S. Internal Revenue Service will waive some penalties for taxpayers who owe taxes because of Obamacare.

The changes, announced Monday in Washington, apply only to people who received subsidized health insurance during 2014. On tax returns, they must reconcile eligibility for the credit with their actual income and pay back some of the subsidy if they received too much.

That can happen if someone got a higher-paying job or a raise during 2014 and didn’t ask the government to alter the subsidy.

The IRS will waive penalties for making that payment late or for failing to pay estimated taxes throughout 2014.

Taxpayers must send in a letter for a penalty waiver. They still must pay the taxes within a year and will owe interest after April 15, the due date for individual tax returns.

Rube Goldberg…


People refusing Government Cheese

Americans Protest Obamacare by Refusing Health Insurance Subsidies – US News.

She wanted to keep the catastrophic health insurance plan she once had, which she says fit her needs. But under the Affordable Care Act, the government’s health care reform law, the plan was discontinued because it did not comply with the law’s requirements, and her bills doubled to more than $400 a month. “I wanted a minimal plan and I’m not allowed to have it,” she says. “That seems like an encroachment on my freedom.”


Though Brewer could pay less for a plan if she were to accept a subsidy from the federal government, she refuses. “I want to pay my own way,” she says. “I will not take a handout.”

Kudo’s to Grace Brewer and her refusal of Government Cheese. Unfortunately, for many, it is simply impossible to pay afford coverage at all with accepting a subsidy. That said, my experience is very similar to the broker quoted in the article…

Her sentiment is unusual, but brokers say they do hear from clients who are eligible for subsidies – which are based on household income and not assets – but want no part of them.

Yep unusual. Back to Government Cheese….


Received a subsidy? Visit a tax preparation service

Latest Tax Season Headache? Obamacare – Bloomberg View.

There’s been a lot of talk about the “hidden taxes” in the Affordable Care Act, but here’s one I hadn’t thought of before or seen mentioned anywhere: the sudden need for folks with simple tax returns to avail themselves of the services of a paid professional. If you have no income outside a modest salary, and not much in the way of potential deductions such as huge mortgage interest or state tax bills, then there was really no reason to use a tax preparer. Even the mathematically challenged should, with the aid of a calculator, be able to fill out their 1040EZ forms just fine. But Obamacare has introduced a significant level of complexity into the taxes of lower-middle-class wage earners. More of them are going to need an accountant to negotiate the process — or risk owing the government hundreds of dollars because they didn’t fill out the forms correctly.

The money doesn’t go to the government, of course, but in many ways this looks like a tax: Suddenly, people with simple incomes are going to need to pay a significant sum to keep themselves out of trouble with the IRS. This tax will be extremely regressive, because the people most likely to be hit by it are people whose incomes are (or have been) low enough to qualify for subsidies.

That’s not to say that these people are worse off because of Obamacare. For one thing, lower-middle-class workers have always historically used tax preparation services more than they really should, because they really need their refunds and they’re worried about getting it wrong. But it is one more symptom of the law’s Byzantine complexity that new costs keep popping up just where voters least expect them. (all emphasis added)

Goodbye 1040EZ, hello tax complications for those who can least afford it. Rube Goldberg I say.

Oh, the publically traded tax firms are H&R Block and Liberty Tax Services.



The Obamacare tax man cometh: Will you be ready?

The Obamacare tax man cometh: Will you be ready?.

While more than 75 percent of filers are expected to have no problem complying with a new disclosure requirement, millions of others could face a time-consuming, complicated process to determine if they owe the government money or are owed money in connection with subsidies they received to help pay for their Obamacare health insurance plans.

If peoples’ annual incomes were higher than they first estimated when they applied for those subsidies, they will owe money back to the government. The reverse is true if their incomes were lower than estimated. About 85 percent of the 6.7 million paying Obamacare customers as of October were receiving subsidies, and research suggests that many of them could have had income swings during the year.

Millions of other people will be trying to figure out during tax season if they qualify for one or more of a slew of exemptions from the Obamacare mandate that they have health insurance during 2014 or face a fine.



Affordable Care Act Creates a Trickier Tax Season

Affordable Care Act Creates a Trickier Tax Season – WSJ.

The law’s requirement that most Americans carry health insurance means all filers must indicate on federal tax forms whether they had coverage last year and got tax credits to help pay for it. Those who didn’t have coverage could face a fine, although reduced staffing at the Internal Revenue Service and certain changes to the law mean the so-called individual mandate is expected to be lightly enforced this year, tax preparers say.

Meanwhile, millions of Americans who got subsidies under the law may find they are getting smaller-than-expected refunds or owe the IRS because credits they received to offset their insurance premiums were too large. As many as half of the roughly 6.8 million Americans who got subsidies may have to refund money to the government, based on one estimate by tax firm H&R Block Inc.

“The ACA is going to result in more confusion for existing clients and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” said Charles McCabe, president of Peoples Income Tax and the Income Tax School, a Richmond, Va., provider of tax preparation and education. “The whole implementation of Obamacare will be frustrating for tax preparers.”

But where there’s pain, there’s opportunity…

But the season could be a lucrative one for tax firms. Liberty Tax Service, a tax-preparation franchise, began calling hundreds of thousands of customers in November to invite them to a store to get help applying for an exemption to the insurance-coverage requirement. About half of the company’s 4,000 stores opened weeks ahead of their usual start date to provide health-law tax advice.

If you’re going to owe the penalty, my recommendation is to take profits from investing in the tax preparation services. NOTE: I am NOT qualified to give investment advice!



Liberty Tax Service Rings in 2015 Tax Season With Food, Festivities and Free ACA Advice – Yahoo Finance.

Liberty Tax Service will ring in the 2015 tax season with Taxapalooza, a grand opening celebration on January 7 at more than 1,000 offices across the country. It’s not just food and fun that will be shared. Guests will be treated to free advice and information about the Affordable Care Act (ACA), which will have tax implications for the first time this season.

“I have said more than a few times that the Affordable Care Act is a game-changer,” said Liberty Tax CEO John T. Hewitt. “We opened many of our offices on November 15 to help people enroll in health insurance and apply for coverage exemptions. Now, before tax filing opens on January 20, we want to invite people in and help them really understand how this law will directly affect their taxes this year.” (emphasis added)

Taxapalooza will be a national party to celebrate the start of tax season and to assure taxpayers that Liberty Tax has the resources and the knowledge to handle all their tax issues, even with late changes to the tax code and the ongoing evolution of the ACA.

If Obamacare subsidies and/or penalties have made your tax situation complicated, use the services of a professional tax preparer. This is no place for amateurs.

If you want to complain, call your political representatives. If you want to profit off of the tax complications and chaos, purchase the publically traded tax preparation companies.


Obamacare taxes & Penalites – The Rube Goldberg edition

New health care law complicates tax filing season for many in NC | National Politics | NewsObserver.com. NOTHING in this article is restricted to North Carolina, the problems and challenges described are NATIONWIDE issues.

The purpose of subsidies is to make Affordable Care Act plans… well “affordable” for lower income households. While a subsidy may at times accomplish this purpose, it creates a wealth of complications for these very same people.

The imminent tax law changes are likely to bewilder the people for whom the Affordable Care Act was designed: low-income people who needed help to figure out how to buy federally subsidized health insurance.

Jackson Hewitt Tax Service is predicting on its website that more than a third of people who received health insurance subsidies were overpaid and now will owe “pretty hefty repayment liabilities.” Others could end up paying hundreds of dollars in penalties for failing to buy health insurance.

This creates two issues:

  1. People who used to do their tax returns can no longer do them thanks to the complications of Obamacare
  2. The cost of tax preparation services is going to increase

Professional tax preparers plan to charge extra for sorting through the ACA’s knotty requirements. Still, they count on a flood of new customers ready to pay more in hopes of maximizing their subsidies and minimizing penalties, especially the myriads who opted to ignore the law and skip insurance coverage this year.

Isn’t capitalism great? Publicly traded tax companies include H&R Block and Liberty Tax.

Taxes are what you owe if you received too much in subsidy payments (technically advanced tax credits). Penalties are what you owe if you weren’t insured. Speaking of penalties for 2014…

The ACA’s minimum penalty this year is $95 per individual or $285 per family, but the law specifies that violators must pay the higher of two penalties. The higher penalty is calculated as 1 percent of household income above the tax filing threshold, which could come to several hundred dollars per person in many instances.

The maximum annual penalty this year, based on household income, is $2,448 per individual, and $12,240 for a family of five or more.

The penalties are docked from tax refunds, and for people who don’t get a refund this year, the penalty will be rolled over to future years, shadowing the taxpayer from year to year unless the IRS issues an amnesty.

Low-income filers are particularly vulnerable to the ACA penalty because they are dependent on tax refunds, notably the federal earned income tax credit, which can easily come to several thousand dollars per person, said Kala Shivali, franchisee of four Liberty Tax offices in Raleigh.

The sheer complexity of the new tax requirements, compounded by expected technical and administrative glitches, has some predicting that the the IRS will be in a forgiving mood this year.

“Health care systems don’t have to be this complicated,” said law professor Timothy Jost at Washington and Lee University. “I think this year they’ll have to cut people slack on this stuff.”

Read more here: http://www.newsobserver.com/2014/11/12/4317123_new-health-care-law-complicates.html?rh=1#storylink=cpy

No, they don’t have to be this complicated. Talk about jumping from the frying pan into the fire.

Prediction: Chaos


Read more here: http://www.newsobserver.com/2014/11/12/4317123_new-health-care-law-complicates.html?rh=1#storylink=cpy


Read more here: http://www.newsobserver.com/2014/11/12/4317123_new-health-care-law-complicates.html?rh=1#storylink=cpy

Obamacare Subsidy: The IRS Violated The Law And State Sovereignty

The IRS Violated The Law And State Sovereignty – Forbes.

What does the “Affordable” Care Act say regarding subsidies…

The Affordable Care Act explicitly says that subsidies are available only “through an Exchange established by the State.” Thirty-six states defaulted to the federally-created exchanges in 2014, making their residents ineligible for health insurance subsidies if the Supreme Court rules that the law means what it says.

One would think when it comes to the rule of law, that words mean things. Color me moderately skeptical.

The IRS ruled that applicants enrolling through a federal exchange (healthcare.gov) would also be eligible for subsidies. This act, combined with other aspects of the law appears becomes a states right issue.

In arguing that the subsidies are legal, the Obama administration “fails to consider the provision’s place within our constitutional structure,” the brief argues. The language of the statute is self-contradictory and ambiguous and “cannot justify the agency’s encroachment” upon State sovereignty. Regulation of health insurance has traditionally been a responsibility of the states, and the Affordable Care Act contained a number of provisions that reinforced that authority, including a choice of whether or not to establish an exchange. If they did, their citizens would receive subsidies, but their insurance markets would be subject to much greater federal control. The trade-off is that if they did not, citizens and businesses in the state would be protected from a number of the ACA’s mandates and financial penalties. (emphasis added – Ed)

“The IRS Rule eliminated the statutory choice by imposing those tax burdens in all States – even those that declined to establish their own Exchanges. The result is a more expansive exertion of federal regulatory control over health insurance than the statue authorized.”

The brief cites case previous law that says “if Congress intends to alter the ‘usual constitutional balance between the States and the Federal Government,’ it must make its intention to do so ‘unmistakably clear in the language of the statute.’” (emphasis added)

Congress did not do that, making a strong argument that the Supreme Court should decide that the IRS Rule is illegal.

Separately, the Galen Institute is working with colleagues on a policy recommendation for Congress to create a safety net for those who would lose their health insurance if SCOTUS agrees that the subsidies in federal exchanges are illegal. Stay tuned for details.

Unfortunately, you can still color me skeptical. However, Republican’s DO need to have a Plan B in case SCOTUS does rule in their favor.


Thanks Obamacare: 3 Tips for Filing Taxes

CMS (Center for Medicare and Medicaid Services) has come out with a helpful document titled: 3 Tips About Marketplace Coverage & Your Taxes

The tips are:

  1. Watch your mail for Form 1095-A. It will help you file your 2014 federal taxes.
  2. Your final premium tax credit for 2014 will be computed with your federal income tax return. Use Form 8962
  3. If you didn’t have health coverage for part of 2014, use Form 8965.

The complexity is mind boggling. If you are receiving a subsidy, say goodbye to Form 1040EZ. Have a problem, call your Washington legislatures.

Download (PDF, 165KB)




Coming soon to subsidy receivers: A more intimate relationship with the IRS

Obamacare Unleashes IRS on Americans | Policy Paper | Senate Republican Policy Committee.





The Penalty:

Early next year, the IRS will begin collecting revenue from Obamacare’s individual mandate tax penalty. Americans who fail to obtain insurance that complies with numerous Washington mandates – and who fail to qualify for an exemption from the individual mandate – face penalties of $95 ($285 per family) or one percent of household income, whichever is greater. To collect this penalty, the IRS will target people’s tax refunds.

Subsidy Reconciliation:

The IRS also plays a key role in implementing Obamacare’s complicated subsidy scheme. The health care law authorizes tax credits for people in households with income between 100 percent and 400 percent of the federal poverty level, who can’t get insurance through work or through a government program, and who reside in states that established their own exchanges. In 2012, the IRS issued an illegal rule that also extended these tax credits to people in states that use the federal exchange. (Ed note: The Supreme court will decide  if federal exchange subsidies are legal)

Form 8962 for subsidy reconciliation:

Form 8962 allows households that claim a premium tax credit to calculate the correct tax credit amount and the amount that will need to be reconciled. The form has 36 lines for entry and will require filers with any change in coverage during the year to fill in 72 boxes (six boxes per month). Altogether, Form 8962 has 95 boxes for entries for single filers and 133 boxes for entries for married filers with two dependents. People who previously used IRS’s short form (1040EZ) to file their return, and who receive credits this year, will need to switch to the more complicated long form (1040 or 1040A).

Instructions for Form 8962 consist of 15 pages of complicated terminology and worksheets that will take the average tax filer hours to understand, will be incredibly frustrating, and will undoubtedly result in many inaccuracies. . Because of the convoluted structure of Obamacare’s subsidy scheme, the instructions have to explain how tax filers should allocate tax credits under certain conditions and how they should correctly calculate tax credits if household size changes during the year, such as through marriage, divorce, birth of a child, or death of a family member. Despite their length, the instructions fail to provide directions for filers to figure out whether offered employer coverage satisfies Obamacare’s minimum essential coverage requirement.

Taxpayers who claim one of the 19 exemptions from the individual mandate must file Form 8965 with the IRS. As many as 23 million Americans may have to file a Form 8965 for the 2014 filing season. The form has 21 boxes for entries for single filers and 78 boxes for entries for married filers with two dependents. Instructions for Form 8965 take 12 pages and contain five worksheets. One tax expert told Politico, in an August 11 article, that the application requirements for some of the exemptions are “hopelessly complex.” Liberal supporters of the law agreed, telling the paper: “The folks who are helping consumers are reeling. A consumer can’t be expected to understand this.”

You can call this a Republican “hack job” but unfortunately most Republican protestations that have been ridiculed by the legacy media and Democrats have turned out to be largely truthful.

Prediction: Chaos


For tax preparers, PPACA may bring a paperwork feast

Obamacare WILL bring a paperwork feast – For tax preparers, PPACA may bring a paperwork feast | LifeHealthPro. Only the sun coming up tomorrow morning is more certain.

At this point, Liberty Tax is predicting the PPACA form business will increase fee revenue about 2.5 percent to 3 percent in 2015, and more than that in 2016.

One source of optimism: Liberty Tax believes Form 8962 will be intimidating enough to force many consumers who have been doing their own taxes to seek professional help.

“Our franchisees are prepared for a robust tax season,” Hewitt said. (Hewitt is chairman of Liberty Tax – Ed)

Bill Cobb, president of H&R Block, is also looking forward to an increase in the percentage of tax filers who seek professional help. “Those that received an advanced tax credit will no longer be eligible to file their returns on a 1040EZ,” he said. (emphasis added in this quote)

This is going to be a giant mess. Keep it simple stupid and Obamacare are on opposite sides of the universe.