US President Barack Obama’s healthcare insurance law was once seen as a big political advantage for the congressional Democrats as the Affordable Care Act was touted as “the largest tax cut for healthcare in American history.” But experts have come up with entirely different arguments about health insurance and tax refunds.
According to the experts, the Obamacare has made an already complicated tax system more complex for many consumers as over one third of the nearly seven million American households, receiving tax credits to help pay for Obamacare to get insured, will lose all or a portion of their expected tax refunds this year.
George Brandes, vice president for health care programs at Jackson Hewitt Tax Service, said, “More than a third of tax credit recipients will owe some money back, and (that) can lead to some pretty hefty repayment liabilities.”
According to The USA Today, there are two basic statistics that bracket the potential exposure:
• The average tax credit for subsidized coverage on the new health insurance exchanges is USD 264 a month and USD 3,168 for a complete year (full 12 months).
• The average tax refund is about USD 2,690.
The financial experts explain, the Americans whose income for this year turns out to be bigger than estimated, at the time when they applied for getting insured medically, will pay their taxes on the difference in the tax credits they received.
Experts say the Affordable Healthcare Act, which is popularly known for its ever-changing vague details, is most likely to shock workers who underestimated their income and had larger earnings than estimated when they took tax credits related to Obamacare.
According to the experts, more the income in 2014 (against the estimated income after taking tax credit from the health-care insurance), the smaller is the tax refund.
For instance, if your 2014 earnings are higher than estimated then paying back a meagre 10-percent tax credit can lower one’s refund by several hundred dollars.