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.<\/p>\n\n\n\n
The chargeback can sting. Collectively, 415,000 California households<\/a> 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. <\/p>\n\n\n\n This repayment rule is connected to the federal\u00a0Affordable Care Act<\/a>\u00a0and the state-based health insurance plans it encouraged.\u00a0Covered California<\/a>, the state\u2019s 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\u2019ll earn the following year or if they lose a dependent and do not report that change.\u00a0<\/p>\n\n\n\n The federal government collects any \u201cexcess\u201d aid when people file their taxes. The government calls this process \u201creconciliation.\u201d <\/p>\n\n\n\n Ten years after the rollout of the insurance marketplace, many Californians continue to be caught off guard come tax filing time. Often the charges come as a shock.<\/p>\n\n\n\n \u201cThey feel like they\u2019re following the rules, they\u2019re getting their coverage. And, they just kind of feel like they\u2019re getting in trouble for doing everything right,\u201d said\u00a0Audrey Casillas<\/a>, assistant director of community economic development services at\u00a0Koreatown Youth and Community Center.<\/a>\u00a0Her nonprofit helps local low-income residents prepare their taxes at no cost as part of a\u00a0Los Angeles County tax assistance program<\/a>.\u00a0\u00a0<\/p>\n\n\n\n The people who receive excess aid are not wealthy. About half of the households who owed the IRS for excess premium subsidies in tax year 2021 earned less than $50,000, according to data from the agency.\u00a0<\/p>\n\n\n\n