Get your health care through Covered California? Beware of this tax peril

By Ana B. Ibarra (CALMATTERS) – Every tax season hundreds of thousands of Californians are hit with an unexpected bill: They  owe hundreds of dollars or more to the IRS because they accepted more money in subsidies for health insurance than they were allowed. The chargeback can sting. Collectively, 415,000 California households owed the IRS close to $690 million in 2021 in charges related to the health care subsidies, according to agency data from the most recent year available. That is roughly $1,662 per person or family. Many people who end up owing money live in lower-income households. This repayment rule is connected to the federal Affordable Care Act and the state-based health insurance plans it encouraged. Covered California, the state’s insurance marketplace, offers generous premium subsidies to those who qualify based on their income, but people can unknowingly receive too much aid if they underestimate how much they’ll earn the following year or if they lose a dependent and do not report that change. The federal government collects any “excess” aid when people file their taxes. The government calls this process “reconciliation.” Ten years after the rollout of the insurance marketplace, many Californians continue to be caught off guard...