Beginning in 2014, federal tax credits will be available to low-income individuals to purchase coverage through an insurance exchange. But an increase in annual income or change in family status during the course of the year will require some enrollees to refund at least a portion of the entire subsidy.

Critics contend that the clawback system could be disastrous if people do not recognize that they might have to repay some of the funds. Subsidies will be given on a sliding scale up to 400% of the Federal Poverty Level (FPL). But the amount of the advance tax credit will likely be determined based on the applicant's tax return and self-reported eligibility status, and an inaccurate prediction could result in an applicant having to repay some or all of the subsidy.

Through a paperless system, insurance exchanges are expected to allow individuals to select a health plan, determine whether they qualify for a subsidy and have that subsidy paid directly to the health insurer each month. It is estimated that by 2019, 19 million people will receive federal subsidies.

While the subsidies come from the federal government, state exchanges will take the heat if they aren’t administered correctly. The exchange will be the face of the tax credit and could suffer a severe backlash if people don’t fully understand how the credits work.

Texas lawmakers have yet to pass legislation establishing a health insurance exchange.