Southwest Harbor resident Diana Newman – who obtained Affordable Care Act insurance in 2014 – got a $400 surprise when she filed her taxes a few weeks ago.

“It was quite shocking,” Newman said of the $400 she may owe Uncle Sam because of how the ACA affected her tax return.

She isn’t alone.

Over half of those who have filed taxes so far through H&R Block will have to pay more to the IRS or have their refunds reduced because the subsidies that help pay for ACA insurance were incorrectly applied, the national tax preparation firm said. Taxpayers have until April 15 to file, and some, like Newman, are discovering that the ACA is affecting their taxes.

The tax troubles are another stumbling block in what had been a long, difficult year trying to figure out how to use and pay for her new insurance, Newman said.

More than 74,000 Mainers had signed up for ACA insurance through Feb. 15. About 44,000 Mainers had a plan in 2014 and are now reconciling ACA insurance with their taxes for the first time.

“At the end of all this confusion, I was hit with hundreds of dollars at tax time. It’s frightening,” said Newman, who normally gets a small refund after filing her tax return.

Newman was told that because the health coverage subsidies she received in 2014 were more generous than they were supposed to be, she owed the IRS about $400. Her monthly premium was only $7 because her $19,000 income meant she qualified for substantial subsidies.

“I make a nominal income and we absolutely cannot just write the IRS a check,” said Newman, 61, a part-time musician who was previously uninsured. “We live week to week. We discuss whether to put gas in the car to drive around town.”

Newman has subsequently received a letter from the IRS telling her that information sent to her for use on her tax return was incorrect, but it didn’t specify what was wrong. About 800,000 such letters were sent out.

“At this point, I don’t know what to think. I may owe more, or less, or about the same,” she said.

ACA SUBSIDIES TOO HIGH FOR MANY

According to H&R Block, 52 percent of its customers who purchased ACA insurance underestimated their 2014 income while enrolling for health benefits in late 2013 or early 2014, and as a result they received higher subsidies than they should have.

The subsidies help pay the premiums of those who earn between 100 percent and 400 percent of the federal poverty level, or up to $95,400 in annual income for a family of four.

On average, H&R Block customers owed the IRS an extra $530, although they saw their refunds reduced rather than having to write a check. The average H&R Block refund was $3,100 for taxpayers who purchased marketplace insurance. Meanwhile, one-third of those H&R Block customers overestimated their income and instead received a larger refund, or had what they owed to the IRS reduced. For those customers, they received an extra $365 after filing their taxes. The remaining 15 percent correctly estimated their income.

HARD TO PREDICT ANNUAL INCOME

Roger Prince, senior manager at BerryDunn, a Portland accounting firm, said that although he hasn’t personally assisted anyone who owed money because subsidies were too generous, tax preparers were expecting this phenomenon.

“I’m not surprised. It’s very difficult if you’re self-employed or working part time to correctly estimate your income ahead of time,” Prince said.

Because most full-time workers obtain health benefits through their employer, many of those purchasing insurance on the marketplace are self-employed or part-timers.

“The level of payback of the (subsidies) is significant in that it’s costing taxpayers a large percentage of their refund – a refund many of them count on to pay household expenses,” Mark Ciaramitaro, vice president of H&R Block health care and tax services, said in a written statement.

Those who refused to purchase insurance in 2014 owe a $95 penalty or 1 percent of their income, whichever is greater. For H&R Block customers paying the penalty, the average amount was $172.

‘IT COULD HAVE BEEN A LOT WORSE’

Mitchell Stein, a Cumberland health policy analyst, said the H&R Block analysis shows that people made more money than expected, which means that overall, their finances have improved. Also, he said even those who owed the government money were only 10 percent to 20 percent off in their income estimates.

“Most people did a pretty good job of estimating,” Stein said. “It could have been a lot worse.”

Newman said she estimated her income correctly, so she’s puzzled at why she owed so much more on her taxes. However, based on her interview with the Press Herald, Newman’s subsidy may have changed throughout the year based on the number of dependents in the house. Household size and the number of dependents on the health plan affect the subsidies.

Newman’s household size changed during the year because her oldest son graduated from college in June, and was a dependent on her plan part of the year.

She had many confusing conversations with federal government employees about her household size, and her subsidy increased for a few months. Her son has now purchased his own insurance, so that won’t be an issue in 2015.

Newman was afraid to go to the doctor because she was worried about the cost and confused over how to use her insurance. Her monthly premiums declined to less than $2 per month for 2015.

Kevin Lewis, executive director of Maine Community Health Options, the insurer Newman chose, said that, in general, when someone’s life circumstance changes, such as getting married or having someone move out of the house, the subsidy amount will be adjusted even if it’s outside of the annual enrollment period.

“The tax premium subsidies have added a layer of complexity to the process, but they also have helped tens of thousands of Mainers be able to afford insurance,” Lewis said.