AUDIE CORNISH, HOST:
Tax day is about a week away, and for many, the Affordable Care Act has complicated returns. Obamacare policyholders aren't sure what to expect, either a surprise refund or higher-than-expected tax payments. Here's NPR's John Ydstie.
JOHN YDSTIE, BYLINE: If you're an Obamacare policyholder, filling out your 2014 federal income tax return will require you to figure out whether the premium subsidies you received were appropriate for your level of income. Ellen Goldlust of Blacksburg, Va., set out to do that when she tried to do her taxes early this year, but Obamacare presented some problems for her online tax filing software.
ELLEN GOLDLUST: So I took it to a friend's tax guy and he redid my taxes for me and I ended up with a $3,900 refund. It was about twice what I thought I was getting.
YDSTIE: A study by the Kaiser Family Foundation estimates about 45 percent of Americans who got their health insurance through the ACA will get a bigger refund than expected. Ellen Goldlust makes just $30,000 a year as a freelance book editor. The oldest of her two sons is headed for college next year, so her big refund was a welcome windfall.
GOLDLUST: Discovering that I was getting $3,900 back was like winning the lottery.
YDSTIE: Part of the reason her refund was so large is that Goldlust chose to take less than her estimated $250 a month premium subsidy when she made her monthly payments during 2014.
GOLDLUST: With ACA being new, I didn't know what was going to happen, and I didn't want to take a chance that I would end up having to come up and pay a chunk of money.
YDSTIE: A lot of Obamacare policyholders couldn't afford to do that, says Cynthia Cox of the Kaiser Family Foundation. If they didn't take their full subsidy each month, she says, they couldn't pay their insurance premiums. But that leaves them no cushion to absorb reductions in the amount of their subsidy if their income rises or they have a change in family status. So Cox says they could have a nasty surprise.
CYNTHIA COX: Roughly half of households who qualified for subsidies last year could owe some or all of that back to the government when they file their taxes.
YDSTIE: According to estimates generated by the Kaiser Family Foundation, the average bill for those taxpayers will be almost $800 more than they expected. Increases in income could be the cause, but significant life-changing events might affect your subsidy, too. That's what happened to Jody Cedzidlo. She got married in 2014 to her longtime partner, Eric Haugen. They didn't realize until tax time how much that changed things.
JODY CEDZIDLO: Even though we have the same two incomes, when you add them together, we're not anywhere near eligible for the same subsidies.
YDSTIE: Their total subsidies went from about $250 a month before being married to just $60 after tying the knot. That's because their income as a couple came close to exceeding the level that qualifies for an ACA subsidy. Their accountant's first pass at their taxes showed that they owed the government about $1,800 for subsidies they shouldn't have received. But Jody thinks that's because the returns showed them being married for the full year, when they actually didn't get married until September 6. She hopes a redo of the taxes will show they only owe $400.
CEDZIDLO: We just did not know any of this. I mean, our decision to get married - we didn't realize we needed to research it financially. I mean, I just can't believe what a big difference it made.
YDSTIE: Cynthia Cox of Kaiser says this tax year will be a learning experience. The lesson, she says, is to report any change in income or family status to healthcare.gov, so your subsidy is adjusted right away. There is one other group which will owe more tax in 2014. Obamacare required everyone to have health insurance beginning last year. If you didn't and you didn't qualify for an exemption, a penalty of $95, or 1 percent of your income, whichever is larger, will be added to your tax bill. John Ydstie, NPR News, Washington.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.