IBD uncovers shocking revelations: Not filing tax return has consequences & earning more than you thought means you pay more in taxes!

Is anyone else noticing a pattern here?

After tracking this stuff for nearly two years now, I've determined that there are 4 types of right-wing attacks on the Affordable Care Act:

  • 1. Complete nonsense/made-up numbers
  • 2. Genuine problems which do need to be addressed in a rational, common sense manner
  • 3. Gross exaggerations of real, but fairly minor issues
  • 4. Claims which are technically accurate, but which are either not bad things at all or, if they are, are in no way damning of the ACA

The 3 links above fall into the third and/or fourth category, as does this inane editorial from Investor's Business Daily:

Remember the hue and cry when it looked like the Supreme Court could deny ObamaCare subsidies to millions of people? Looks like it could happen anyway, thanks to the law's tax complications.

Tax complications? My goodness, that does sound troubling! Let's find out more.

Fully 40% of taxpayers who received ObamaCare subsidies last year haven't filed their taxes yet and are at risk of losing their subsidies for next year, according to the American Action Forum.

An update on ObamaCare that the IRS recently sent to Congress said that out of the 4.5 million taxpayers who got ObamaCare's "advance payment" subsidies last year, only 2.7 million had filed the required tax forms as of the end of this May.

The rest filed for an extension (360,000), haven't filed at all (710,000) or didn't submit the new ObamaCare form — Form 8962 — that's required to make sure they got the right subsidy amount (760,000).

Huh. 20% of those who IBD claims are "at risk" actually aren't; they simply filed for an extension, just as millions of people have done every year for many years now.

Another 42% filed their taxes but forgot to fill out Form 8962. That no doubt has an extremely complicated solution; you probably have to jump through all sorts of bureaucratic hoops and red tape to resolve that issue! Oh, wait: Here you go. It's a two-page PDF form, available to download for free from the IRS. You don't have to sacrifice your first-born child or sign your name in blood or anything to get a copy, and in fact it should have been sent by email to every exchange enrollee who claimed credit eligibility in the first place.

That leaves just 710,000 people who "didn't file their taxes at all". Newsflash: People who are legally required to file a tax return who fail to do so often find themselves in a bit of trouble with the IRS later on, and generally face financial problems as a result. I suppose my failing to renew my driver's license at the DMV is somehow the Affordable Care Act's fault as well?

These 1.8 million taxpayers actually represent 2.8 million individuals, according to the IRS, since one taxpayer can file on behalf of his spouse and children.

Yup, sounds about right. Could be even higher; that's only a 1.55-per-household ratio.

In a separate document, the IRS notes that if these taxpayers don't file and if they try to sign up for a plan for 2016, they won't be eligible for ObamaCare subsidies. And they might have to "pay back some or all of the 2014 advance payments of the premium tax credit."

Gee, ya think? Imagine that: If you don't provide some sort of proof that you were legally entitled to a tax credit last year, you won't be allowed to continue receiving them? And you might even have to (gasp) pay it back??

Wow, that's a real shocker...especially coming from the people who want you to provide a photo ID just to have the privilege of voting and who refused to accept the President of the United States' birth certificate as proof that he was, you know, born in the United States.

This is the latest evidence of just how wildly complex ObamaCare's subsidy scheme is. When enrollees sign up for coverage, they have to forecast what their income will be next year, because it determines their subsidy amount.

Guessing correctly has proved nearly impossible.

Wow! A "wildly complex scheme" that involves the "nearly impossible" task of...making an educated estimate of how much you'll probably earn next year?

Newsflash: Anyone who's self-employed (which is a huge portion of the ACA exchange enrollment base, including myself) already has to do that every year anyway. Yes, it's a bit annoying, but technically speaking, no one knows how much they'll earn next year, since they might get fired, laid off...or even seriously sick or injured (good thing they have health insurance to cover their medical expenses, right??).

The IRS says that only 10% predicted their income correctly. About 40% made less than they thought they would and so were eligible for an average $600 in additional subsidies. But half made more than they predicted and had to pay some of their ObamaCare subsidies back. The average repayment was $800.

So, to summarize:

  • If you earn more income than you expected to, you have to pay more in taxes (or get a smaller tax refund)
  • If you earn less income than you expected to, you pay less in taxes (or get a larger tax refund)

This is not particularly earth-shattering news.

Brittany La Couture, a health policy expert at the American Action Forum, noted, "The legislative marriage of two of life's most baffling necessities — taxes and health insurance — has naturally resulted in some confusion."

That's a bit of an understatement.

Really, guys? You're supposed to be experts in Investments and Business. It's right there in your name. "I thought I'd earn $50,000 this year but it turns out I only earned $45,000, so I get a larger tax refund" is not particularly "confusing" or "wildly complex". Nor is "I forgot to fill out a 2-page form, so I guess I'll have to take 10 minutes out of my day to do so in order to cut my taxes by thousands of dollars." Nor, for that matter, is "I was supposed to file my taxes but decided to blow it off, now I have to pay more in taxes as a result."

These are concepts which most people learn in college, or at least in their mid-20's.

Mildly annoying? Sure...but you guys are acting like Joey Tribbiani from "Friends" in that episode with the infomercial.

To be fair, some of those who had to pay back some or all of their tax credits expressed the exact same befuddlement last spring, which I noted at the time. I'm not trying to act smug here, but I really don't understand why this concept is so difficult to grasp.

Of course, IBD does raise a valid point: The Affordable Care Act is pretty complicated overall. Gee, if only there was a simpler way of handling healthcare in America...where you simply paid taxes to the government, which in turn paid healthcare providers to provide medical attention when you needed it. Perhaps it could have a catchy name, something like, I dunno..."Single Payer" or "Medicare"?

Nah...