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Financial Planning > Tax Planning

Taxpayer Reports of ACA Premium Tax Credit Subsidy Help Fall 9%

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Fewer U.S. taxpayers are reporting help from a key Affordable Care Act health insurance subsidy  on their income tax returns this year —but, for the people who are using the subsidy, the average amount has grown.

  • The number of taxpayers who say they used ACA premium tax credit help in 2017 fell 9%, to 1.5 million.
  • The total amount of accurate, and inaccurate, premium tax credit help paid to insurers increased 20%, to $7.7 billion.
  • The average subsidy amount per subsidy user increased 35%, to $4.5 billion.

Officials at the office of the Treasury Inspector General for Tax Administration (TIGTA) have included those figures in a new batch of preliminary tax return data for the 2017 benefit plan year and the 2018 tax filing year.  TIGTA officials used data from the day the tax filing season started, on Jan. 29, through March 1.

(Related: ACA Definitions: Enrollment Period Basics)

A copy of the new data is available here.

The total number of consumers filing tax returns held steady at about 61 million.

For the 572,705 taxpayers who received too little help from the subsidy program, the average amount due from the program increased 15%, to about $530 per taxpayer.

For the taxpayers who received too little subsidy help, the average amount owed to the government increased 11%, to $655.

The number of taxpayers who admitted to owing the “individual shared responsibility” penalty thta the ACA imposes on people who fail have what the government classifies as solid major medical coverage fell  17%, to 4.4 million.

A Subsidy Refresher

Most premium tax credit subsidy users get the aid in the form of an “advance premium tax credit” subsidy.

Taxpayers sign up for ACA exchange plan coverage each year from Nov. 1 through Dec. 15, The applicants tell the ACA exchange plan managers how much they hope to earn in the coming year.

The exchange system uses the future income forecasts to calculate how much advance premium tax credit subsidy help each consumer should get during the upcoming benefit year.

To reduce the risk of fraud, the payments go to the health insurers providing the coverage, not to the taxpayers.

After the benefit year is over, taxpayers are supposed to use Internal Revenue Service Form 8962 to tell the IRS how much premium tax credit subsidy help their health insurers get, and whether they should get more premium subsidy help from the IRS or send of the excess subsidy help they have received back.

Some Form 8962 filers have received subsidy help only for themselves. Others use the form to report subsidy help provided both for themselves and for other family members.

— Read More Than 5% of Early Tax Filers Owed ACA Penalties on ThinkAdvisor.

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