STUMP » Articles » Obamacare Tax Watch: First Angry Taxpayers Story » 17 February 2015, 05:53

That I’ve found at a “mainstream” news site anyway.

Let’s check out what’s playing at CNN:

Janice Riddle got a nasty surprise when she filled out her tax return this year.

The Los Angeles resident had applied for Obamacare in late 2013, when she was unemployed. She qualified for a hefty subsidy of $470 a month, leaving her with a monthly premium of $1 for the cheapest plan available.

Riddle landed a job in early 2014 at a life insurance agency, but since her new employer didn’t offer health benefits, she kept her Obamacare plan. However, she didn’t update her income with the California exchange, which she acknowledges was her mistake.

Now, she has to pay back the entire subsidy, which is forcing her to dip into her savings.

“I was blindsided that the subsidy has to be paid back,” said Riddle, adding she didn’t even use the coverage, which she had until she qualified for Medicare in October. “I’m in shock…but I have no choice. Do I want to argue with the IRS or the Obama administration?”

I realized they hid the info about Ms. Riddle’s age somewhat – she was 64 when she applied for the coverage (because the eligibility age for Medicare is 65, and she joined that a little less than a year after signing up for Obamacare coverage). Even if they did not put in that detail, look at the picture of Ms. Riddle:

She’s obviously older. As I’ve said in an earlier post, it’s generally going to be older people who would be getting subsidies at the same income level. While income generally increases with age, there are lots of people under the age of 65 who are not employed, and may be living off of savings. (And there is something odd about Ms. Riddle’s income being so low that she had to pay only $1/month… and she’s not on Medicaid. But then, there’s all sorts of weird boundary conditions, that I’m not going to pretend to know them all.)

But CNN picked well – she’s about in the worst situation there is re: taxes and Obamacare. A high premium amount, she never used the coverage, and now she’s having to pay for all of it.

There are all sorts of situations that end up being nasty re: subsidies:

Also, just because someone qualified for a certain subsidy at the beginning of the year doesn’t mean they are ultimately entitled to it. It’s the total annual income that matters, so if an enrollee got a big raise mid-year, his entire subsidy may have to be repaid.

Early data is in from some tax preparers. Some 53% of Jackson Hewitt clients who received subsidies have to repay part or all of it, with the largest being $12,000, said Mark Steber, chief tax officer. The rest overestimated their income so they are getting even larger refunds. One taxpayer is collecting an additional $7,500.

We’re not going to be hearing from the second type too much. They’re going to be happy.

It’s the first type – whose incomes changed upwards at some point (to be clear: a W-2 reporting income, because those are hard to commit tax fraud with) who are going to be the peeved ones. I’m assuming what happened with the $12K client is that they were under the 400% cliff and then got pushed over.

Even people who wanted to behave well, and report their new incomes, probably didn’t bother because the exchanges were not well set-up to take that info.

And look what the California exchange has been up to:

California’s Obamacare exchange sent erroneous tax forms to about 100,000 households that received federal premium subsidies last year.

At issue is Form 1095-A, which health-law exchanges must send to individuals and families showing how much money they received in 2014 from the federal government to subsidize their health insurance premiums.

Covered California said it sent incorrect information on some forms because its customer data didn’t match what health plans had on file.

For instance, there may have been a discrepancy for the person’s length of coverage in 2014 and amount of subsidy received.

Amy Palmer, an exchange spokeswoman, said the agency is reconciling that information and sending revised forms to the affected customers by later this month.

Yeesh. This can affect people’s returns to the tune of thousands of dollars, after all. That’s ugly.

When I made my Obamacare Tax Watch prediction, I didn’t factor in the inevitable screw-ups with the new forms.

Yeah, that’s going to be part of it.

There’s another example in the CNN piece, where the person has found that she has to pay back the subsidy, so she contacted the exchange with new info (she had re-enrolled before doing her taxes) and found the new premium for her was 75% more what it was before. And she no longer finds this affordable at all.

Whups.

Some other angry people are profiled at Twitchy, but I’m not embedding their tweets here. It doesn’t really count for my prediction anyway.

Just because my prediction is starting to come true in mid-February, I’m going to keep the watch (though not a spreadsheet) going to see just how bad these stories get.

For those who thought the liberal media wouldn’t cover these stories, you have to remember they were forced to cover the screwed-up exchange stories because it was hard for everyone to ignore what an operational disaster that was. My prediction was that there were going to be so many pissed off people, some with very sympathetic stories, that they would not be able to ignore it.

So it begins.