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Financial Planning > Tax Planning

Watchdog finds 194 weird PPACA tax credit claims

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Government analysts have found strange health insurance-related numbers in some taxpayers’ tax returns.

As of Feb. 25, 194 filers had claimed a total of $7.9 billion in advance premium tax credits (APTCs), according to a footnote in a report from the Treasury Inspector General for Tax Administration (TIGTA).

Those filers claimed an average of about $40 million in APTCs each for the 2015 coverage year, according to the TIGTA data.

The TIGTA analysts excluded those filers from their analysis of the APTC program. 

The other 1.4 million filers who put information about Patient Protection and Affordable Care Act (PPACA) premium tax credits in their returns reported receiving an average of only about $3,200 in APTC subsidy support each for the 2015 coverage year, for a total of about $4.2 billion in APTC support.

TIGTA, an arm of the U.S. Treasury Department that monitors the Internal Revenue Service (IRS), completed the report March 31. The watchdog agency released the report to the public today.

TIGTA analysts gave no indication of whether the strange numbers could be the result of taxpayer filing errors, IRS system errors, a low-profile protest, or some other filing problem.

The TIGTA report gives readers an overview of what the IRS has been doing during the 2016 tax filing season. Some early data from the report surfaced last week at a House hearing.

See also: More than 5% of early tax filers owed PPACA penalties

PPACA requires many individuals to have a minimum level of health coverage, or minimum essential coverage (MEC), or else pay a penalty.

The law also created a premium tax credit program that moderate-income consumers can use to pay for health coverage purchased through the PPACA public exchange system.

Consumers start by giving the exchange system estimates of how much they might earn during the coming coverage year.

A consumer can collect the tax credit in the form of an APTC, to help pay for coverage while the coverage years is still under way. Or, consumers can use their own personal cash to pay coverage premiums, then collect the premium tax credit money when they file their income returns for the coverage year.

APTC money is supposed to go to the coverage issuer, not to the enrollee.

TIGTA office analysts did not give any overall tax return filing data for the part of the 2016 filing season that ended Feb. 25. All of the PPACA filing data included comes from that part of the filing season.

During the part of the filing season that ended Feb. 25, according to the TIGTA office analysis of IRS data:

  • 132,570 filers collected PPACA premium tax credits when they filed their income taxes. They received an average of about $1,500 in premium tax credit help each for 2015.

  • 525,760 APTC users told the IRS that they received too little APTC support in 2015. They received an average of about $3,040 in APTC help in 2015, and they asked the IRS to send them an average of about $400 in additional premium tax credit money each.

  • 754,124 APTC users said they received too much APTC support in 2015. They received an average of about $3,050 in APTC support each, and they reported receving an average of $750 in excess support. A PPACA provision that limits how much excess support lower-income people have to pay back reduced the actual repayment obligation average to about $550. 

See also:

Watchdog: IRS used bad Java in PPACA system

Last-minute filers narrow PPACA tax credit reporting gap


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