Unemployed employees are hit with one other shock: Many owe the federal government cash for medical insurance

According to the federal government, Ryan made too much money off unemployment. It was more money than she would have made as a preschool teacher, and it bumped her into a different income bracket that reduced her insurance subsidy under the Affordable Care Act. Desperate to keep health insurance in the middle of the pandemic, she’s trying to figure out how to pay the big bill.

“Where do I get all the money to pay back during the pandemic?” said Ryan, 50, who lives in Bergen County, New Jersey. “What did you expect from us? Drop Obamacare During Pandemic? “

Ryan is one of the million Americans facing surprisingly high tax burdens amid a global health crisis. She was finally able to go back to work in a daycare center but says she doesn’t have $ 3,100. She used the savings she had to move from Pennsylvania to New Jersey when a job opened in her field.

“We’re just trying to get back on our feet and we’re now overwhelmed with all the bills we owe,” said Ryan, who lives with her boyfriend.

Congress is trying to fix this problem so that low-income Americans won’t drop their health insurance because they can’t afford it. The $ 1.9 trillion stimulus package, expected to be passed in mid-March, would forgive these tax burdens. (According to an agreement reached late Friday, households earning less than $ 150,000 would also save taxes on the first $ 10,200 in unemployment income.)

Politicians and health experts say the United States needs to keep as many people as possible covered by health insurance during the deadly pandemic. But this subsidy problem that Ryan and millions of others are now facing makes it difficult.

Low-income workers and the self-employed typically turn to the Affordable Care Act marketplaces for health insurance. If workers earn between $ 18,000 and $ 51,000, they’re eligible for a government grant to make plans more affordable. The catch, however, comes if they got health insurance in November or December 2019 – before the pandemic became a national emergency.

People like Ryan estimated their earnings for 2020 and were far from it, largely because of the additional $ 600 a week Congress made available to the unemployed from April to July. Workers such as preschool teachers, teaching assistants, waiters and the self-employed often benefited more from unemployment than from their regular work last spring. Now they owe money to the government to repay some of their health grants.

This happens to some low-income Americans every year, but experts say it is particularly common now that the livelihoods of so many people have been dramatically disrupted.

According to the Internal Revenue Service, around 3.2 million low-income Americans owed the state money for their health grants in 2018 Data. That number is expected to be over 5 million, according to 2020 Estimates from the Joint Tax Committee and the Kaiser Family Foundation.

“This just goes to show how complicated it is to subsidize people’s health care through the tax system,” said Larry Levitt, executive vice president of health policy for the Kaiser Family Foundation. “In the midst of the enormous uncertainty for the people, it would certainly be helpful if they didn’t have to pay back subsidies for having misreported their income.”

According to the economic stimulus plan, everyone who is unemployed will automatically qualify for the full health insurance subsidy in 2021. If the legislation goes into effect, these Americans won’t get a shock tax bill next year, and they should be able to afford health insurance by now.

Lawyers for the poor hailed these recent initiatives by Congress and the White House, but complained that it had taken lawmakers a year to figure out how to help.

“We have been in a pandemic since March, and nothing has been done by Congress to bring more people to health insurance,” said Tara Straw, a senior health policy analyst at the left-wing Center on Budget and Policy Priorities.

And while there’s a solution along the way, some Americans like Shawn McCreary of Doylestown, Pennsylvania have already paid their taxes – and the credit fine for health insurance.

“That year, I owed $ 3,565 in federal taxes, of which $ 1,300 apparently came from” overpaying “the health exchange because my unemployment was higher than my planned income in November 2019,” McCreary said. “That was a complete surprise to me.”

McCreary, 36, is a special education teacher. He was working as a replacement when the pandemic closed due to the pandemic last March. Since he was a substitute teacher, he was not on the school district’s insurance plan. He had taken out insurance through the health insurance company and said he had even tried to overestimate his 2020 income so as not to pay a fine later, but he was unemployed for most of the year.

As an asthmatic, McCreary already has huge health bills. He was also careful returning to the classroom until he was vaccinated. His grandmother died of Covid-19 in July.

“The pandemic really changed my life from top to bottom,” said McCreary. “I don’t have $ 3,500 to just give back to the government. I almost wish they had paid me less to start with. “

McCreary filed his taxes last month and started a payment plan with the IRS. He will likely have to file an amended statement when Congress passes the stimulus bill that waives the money he owes for the health grant.

For the unemployed, this is another turn in a tough year. Health experts say they just hope the stimulus will go away soon and people will realize they can refill.