Fox Business Network's Cheryl Casone misrepresented a tax credit in the Affordable Care Act by omitting vital information about the program and warning it could lead to “a huge tax bill.”

On Fox News' America's Newsroom, Casone mischaracterized the consequences of the ACA's insurance exchange tax credit application, claiming “if you do not accurately project your 2014 income by October 1, 2013 -- that is this year -- you're going to be hit with a huge tax bill.” Casone went on to explain: “you're going to get a tax subsidy from the government to help pay for getting into the exchanges” and noted that “you may have to pay the government back in the spring of 2015”:

But Casone mischaracterized the program by claiming it will lead to a “huge tax bill.” Recipients may have to repay the tax credit -- in part or in full -- received for the insurance exchange if the recipient projected his or her income lower than it turned out to be. But Casone failed to acknowledge that should an individual's projected income be higher than his or her actual income, he or she, if eligible for the credit, will receive a refund from the government.

As Tim Jost at Health Affairs explained last year, this method is a widely accepted way of providing private health insurance to low- and middle-income families:

At the heart of the Affordable Care Act (ACA) health care reforms are the premium tax credits, which will extend health insurance coverage to 18 million lower and middle-income Americans. The idea of using tax credits to purchase private health insurance for the uninsured is one of a number of the historically conservative policy positions adopted by the ACA. Both the Paul Ryan Roadmap and a recent proposal by James Capretta and Robert Moffit on How to Replace Obamacare also support premium tax credits to make health insurance accessible to Americans.

To create tax credits that are sufficiently substantial to in fact make health insurance affordable to lower-income Americans, without creating a program so costly that it is unaffordable to the country, tax credits must be means-tested and must be structured so as not to crowd out employment-based insurance. This turns out, not surprisingly, to be very complicated.

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Reconciliation.  Although the tax credit is paid in advance directly to an insurer on a monthly basis, it is in fact a tax credit that must be claimed on the taxpayer's annual income tax return.  Final eligibility for the credit, therefore, cannot be known until the taxpayer files his or her annual return, at which point household income for the year will be finally determined. A “reconciliation” must then occur between the tax credit already received and that to which the individual is actually entitled.   If over the course of the year household income turns out to be greater or less than projected, or if household composition or compliance with other eligibility requirements has changed, the final tax credit may turn out to be greater or less than the amount already paid.

If the taxpayer turns out to have been eligible for more than had been paid, the taxpayer gets a refund.  If, however, the government has paid more than the taxpayer in fact turns out to be entitled to, the taxpayer must pay the money back.