Research Report Tax Refunds and Affordable Care Act Reconciliation
Leonard E. Burman, Gordon B. Mermin, Elena Ramirez
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People may purchase subsidized health insurance through the ACA exchanges with premiums based on projected future income. However, if actual income is higher than estimated, they may be required to repay part or all of the subsidy when they file tax returns. This “reconciliation” process could raise taxes substantially for many ACA participants. However, analysis of income tax return data suggests that for most lower-income filers, the reconciliation will reduce the refund they receive rather than require them to remit additional tax because their refunds exceed the reconciliation amount. We conclude by making suggestions to improve the reconciliation process.
Research and Evidence Health Policy Tax and Income Supports
Expertise Social Safety Net Taxes and the Economy Health Care Coverage, Costs, and Access Modeling Federal and State Health System Reform
Tags Health insurance Federal health care reform Refundable tax credits Individual taxes Affordable Care Act