Reconciliation of Advance Payments for Health Insurance Subsidies
NOTE: An updated version of this issue brief is in the works and will be available soon.
Beginning in 2014, the Affordable Care Act (ACA) will make available federal subsidies to eligible individuals for the purchase of health insurance through newly created health insurance Exchanges. These subsidies are a centerpiece of the law and are designed to provide financial assistance to millions of Americans who cannot afford health coverage today. It is estimated that by 2019, as many as 19 million people will receive subsidies through the Exchanges.
This brief explains how advanced payment for health insurance subsidies will work under health reform and examines issues related to potential tax liability for those receiving such subsidies whose circumstances change during the year.