“I was blindsided:” Woman says she was shocked to learn she must pay back her Obamacare subsidy

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NEW YORK (CNNMoney) — Janice Riddle got a nasty surprise when she filled out her tax return this year.

The Los Angeles resident had applied for Obamacare in late 2013, when she was unemployed. She qualified for a hefty subsidy of $470 a month, leaving her with a monthly premium of $1 for the cheapest plan available.

Riddle landed a job in early 2014 at a life insurance agency, but since her new employer didn’t offer health benefits, she kept her Obamacare plan. However, she didn’t update her income with the California exchange, which she acknowledges was her mistake.

Now, she has to pay back the entire subsidy, which is forcing her to dip into her savings.

“I was blindsided that the subsidy has to be paid back,” said Riddle, adding she didn’t even use the coverage, which she had until she qualified for Medicare in October. “I’m in shock…but I have no choice. Do I want to argue with the IRS or the Obama administration?”

Riddle is one of millions of Americans who find themselves in a similar situation. Between 4.5 million and 7.5 million taxpayers received subsidies for insurance premiums when they signed up for coverage on Obamacare exchanges, federal officials said. These folks had to forecast their 2014 income when they applied. Those who underestimated their earnings either will receive smaller tax refunds or will owe the IRS money.

Some enrollees, however, had a change in circumstances — such as a raise, new job, marriage or baby — during the year that could affect their subsidy level. Obamacare enrollees were supposed to contact their exchange so it could revise their premium. Some people, however, did not know they had to notify the exchange or simply didn’t bother.

Also, just because someone qualified for a certain subsidy at the beginning of the year doesn’t mean they are ultimately entitled to it. It’s the total annual income that matters, so if an enrollee got a big raise mid-year, his entire subsidy may have to be repaid.

Early data is in from some tax preparers. Some 53% of Jackson Hewitt clients who received subsidies have to repay part or all of it, with the largest being $12,000, said Mark Steber, chief tax officer. The rest overestimated their income so they are getting even larger refunds. One taxpayer is collecting an additional $7,500.

Some Obamacare enrollees who have to pay back their subsidies are now thinking twice about enrolling for 2015.

Erica Cherington, 32, was “very happy” to enroll in Obamacare last year so she could address some health issues. She only had to pay $89 a month for a Horizon Blue Cross Blue Shield plan, thanks to a $284 monthly subsidy. She let herself be automatically re-enrolled for 2015.

During 2014, however, the Newark, N.J., resident landed a new job with a higher salary. Now, she has to pay back $600 of her subsidy.

To avoid this happening again, Cherington called the federal exchange to update her income, which she hadn’t done when she changed jobs. Her revised monthly premium: $156 a month.

A case manager who handles disability payments, Cherington is now considering dropping her coverage and paying the penalty instead.

“It’s not really affordable,” she said of her new premium. “I don’t know if I’ll be able to keep it.”


  • Todd Nanfito

    My Girlfriend had her Policy changed, unknowingly, on the first of January. her Doctor disappeared from the coverage, due to the change put in place by the exchange. Like they didn’t know that? She wasn’t covered for two months, but even her new card carried the same number, same Company, but with some MIPPA insignia added to it, which her Doctor did not accept. This is a mess, she had to change policies, and was on the phone for 4 hours, while I helped her straight the problem that they caused, out. This is a disaster, and everything that everyone feared was founded and true.

  • s holmes

    Its almost like the dems are not concerned about the health of non dem voters. My guess is not too many special ones will be put on the death list like those despicable people that have ….stay with me now…jobs.

  • laura

    When you sign up for the Market place insurance you are told very clearly that if your income changes you have to report it! I even received a letter mid-year requesting proof of income (pay stubs) so they could make sure I was paying what I was supposed to be. I hate to say it, but this lady has no one to blame but herself. The very last thing you do when you enroll is agree to report any changes to your income immediately and put your electronic signature on it. She’s Damon lucky their not fining her for falsifying her income on top of paying it back!

  • really

    $156 a month isn’t affordable I pay more than that every two weeks and have for my entire working life..get with the program people

  • f4xtrafn

    Yup, just pay the penalty. Then see what happens when you have a serious accident and get a medical bill for half a million dollars and lose everything you own. What a knucklehead. Just as dumb as driving without insurance – even dumber.

  • Pamela

    I over estimated my income and half way through the year could not afford to keep it, so I stopped paying in Sept 2014 thinking if I had to pay a penalty for not having insurance it would be cheaper then the monthly premium/ At the end of the year Dean Health plan ( the plan I choose on Obama care) said that because I didn’t cancel my plan though the exchange but just stopped paying, I had to pay the left over monthly premiums to Dean Health because I didn’t properly cancel the plan. The messed up part is that I did go on the exchange and there was NO option to cancel only a statement saying that If I choose not to pay I might be liable for a penalty. I explained this to Dean and they most UNhelpfully declared it was my problem and the outstanding balance is now due. Obama Care is so unfair and confusing! Sadly even though the plan claims to cover routine exams, BUYER BEWARE if they are not “coded” as preventative you will be paying for those exams, as what also happened to me. I was actually told by a DEAN HEALTH rep, when I called to see why my routine pap was not covered, and I quote “if you come in with a bag of problems dont expect it all to be covered” and then I learned the “coding” game. Obama Care is a joke, I agree we all should have health care but not if its a broken system forced down our throats #obamacare #deanhealth

  • Andrew Allison

    She acknowledges that she was aware of her duty to report a change in income, but now claims to have been blindsided? GMAFB.

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