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August 03, 2018

Maine Woman’s Story Inspires King Bill to Fix Tax Burden for Disability Beneficiaries

Bipartisan bill aims to help qualified beneficiaries receive ACA subsidies.

SCARBOROUGH, ME –U.S. Senator Angus King (I-Maine) introduced bipartisan legislation that aims to fix an issue impacting people who qualify for Affordable Care Act subsidies and have been recently approved as eligible for Social Security Disability Insurance (SSDI). The SSDI determination process can take up to several years, and when the determination is finalized, the agency issues a retroactive lump-sum payment dating as far back as the initial request; the IRS considers this lump-sum payment as income for a single year rather than multiple years, and the added income can bump the individual’s yearly income above the threshold for ACA subsidies. The Tax Fairness for Disabled Workers legislation, which Senator King led along with Senator Marco Rubio (R-Fla.), would direct the IRS to use only the portion of the lump-sum payment that was due in the current tax year when determining a taxpayer’s income eligibility in that same year for ACA subsidies. Senator King was inspired to introduce this bill after being contacted by a constituent.

“ACA subsidies and Social Security Disability Insurance are both designed to help people – so the idea that the current law creates a situation in which some beneficiaries of both programs are stuck with a tax bill of thousands of dollars is simply ridiculous,” said Senator King. “Maine people with disabilities shouldn’t be forced to repay health care subsidies because the tax code fails to recognize that retroactive payments are – as their name implies – retroactive. This is simply commonsense.”

Senator King was inspired to introduce this bill after being contacted by a constituent who was hit with a tax bill of more than $10,000 as the result of unfairly losing eligibility for assistance with her health insurance costs. Casey Thompson is an Orland resident whose determination of eligibility for Security Disability Insurance (SSDI) benefits came with an unwelcome surprise. The lump-sum back payment that she received after waiting several months for a final decision from the Social Security Administration was deemed by the IRS to push her income over the eligibility threshold for the Affordable Care Act's Advance Premium Tax Credit that she had been relying on to pay for her health insurance while her disability limited her ability to work. Since hearing from Ms. Thompson, Senator King has been contacted by a number of other Maine people in similar situations.

Senator King has been focused on making improvements to the SSDI program. In April 2016, he sent a letter to the Treasury Department seeking a regulatory fix for this problem. When the Department replied that a statutory change was needed, Senator King began work to craft legislation. In a November 2016 letter, Senator King suggested multiple improvements to the application process for SSDI and Supplemental Security Income that the Social Security Administration ultimately adopted. Senator King also published a whitepaper in November 2015 with his proposals to help Mainers with disabilities enter the workforce.

Senator King has also actively worked to defend the health insurance of Maine people who rely on the ACA. In a floor speech last week, Senator King discussed the administration’s efforts to undermine the Affordable Care Act (ACA). His speech came soon after his visit to Leavitt’s Mill Free Health Center, where he met with clinic volunteers and patients who feel the effects of continued efforts to sabotage the ACA. Earlier this month, he announced his support for a resolution that would authorize the Senate Legal Counsel to intervene in a legal case challenging the constitutionality of the Affordable Care Act’s (ACA) provisions protecting people with pre-existing conditions. During the health care debate last summer, Senator King outlined a roadmap of health care priorities to stabilize the health care marketplace and lower the underlying costs of treatment and health coverage for people in Maine and across the country. 

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