Repayments and Refunds: Estimating the Effects of 2014 Premium Tax Credit Reconciliation

Issue Brief
  1. We estimate that 61% of subsidy-eligible tax households in the 37 Healthcare.gov states had starting incomes between 100-200% of poverty; 31% were between 200-300% of poverty, and 8% were between 300-400% of poverty. HHS reported that 65% of enrollees had starting incomes between 100-200% of poverty; 23% were between 200-300% of poverty, and 8% were between 300-400% of poverty.

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  2. Refers to the federal poverty guideline in the 48 contiguous states; note that Alaska and Hawaii follow different poverty guidelines.

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  3. We estimate that the average repayment amount would be $794 and the refund would be $773, while H&R Block has reported average repayments of $530 and average premium tax credit refunds of $365 among its early filers, as of February 2015. These differences could be explained by timing (as the distribution of clients filing early returns may differ from overall subsidy-eligible filers) as well as possible differences between the income distribution of H&R Block clients and that of our model. Additionally, in the 2013 income scenario of our model, we assume that eligible household members are enrolled for the entire year (unless they became eligible for other coverage), but most enrollees signed up later in open enrollment, meaning that they were not covered through the Marketplace for the entire year. Finally, our model assumes that no tax households notified the exchange of mid-year income changes, but in reality some enrollees likely would have notified the exchange of income changes and therefore faced smaller repayments at the time of reconciliation.

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