The Washington Post reports this morning that tax preparer H&R Block is warning that millions of Americans will be in for a shock in a few years’ time when they don’t get the refunds they were expecting, thanks to Obamacare.
In a piece titled “Tax preparer fears health law’s bite out of refund,” the Post writes:
Of all the companies worried that the Affordable Care Act will be bad for business, H&R Block may lay claim to the most unique gripe.
The firm prepares millions of tax returns, one of every seven that gets filed to the Internal Revenue Service. The vast majority of its consumers receive a refund; all told, their 26.5 million customers received $50 billion in refunds in 2012.
The Affordable Care Act could change that: It charges a tax penalty to Americans who do not carry health insurance coverage. And that has H&R Block worried that some of those refunds will get eaten up – with a lot of angry customers pointing a finger at them.
“Eighty-five percent of our customers get a refund,” Kathy Pickering, who directs the H&R Block Tax Institute, says. “That refund could be offset by the penalty. And if that happens, they’re going to be understandably angry.”
The company did some polling research to see how much Americans knew about the law and its coming penalties and subsides. Not much, they found.
The company found, in a survey conducted last year, that 77 percent of Americans had no idea that the income tax return they’re filing right now will determine how generous, or skimpy, of a subsidy they receive in 2014.
Forty-four percent of those between 18 and 34 were unaware that they would face a penalty for not purchasing coverage.
“We found that most people didn’t understand what the Affordable Care Act would mean for them,” Pickering told me.
So the company is offering a free “H&R Block Tax and Health Care Review” for customers to see how Obamacare will affect them when the new penalties and subsidies kick in come 2014.
One review was drawn up for a fictional family of four, who had an income of $40,000 in 2012. That family would be eligible for a subsidy and, if they bought health insurance on the exchange, H&R Block estimates it would cost $170 per month.
If they decided to forgo coverage, they will face a penalty of $285 in 2014, which would jump to $975 in 2015. The CBO estimates that about 6 million Americans will pay this fine.