800,000 HealthCare.gov users received wrong tax information
By Jason Millman
February 20 at 11:31 AM - The Washington Post
About 800,000 HealthCare.gov customers got the wrong
tax information from the government, the Obama administration disclosed Friday,
and officials are asking those affected to delay filing their 2014 returns. (AP
Photo/Don Ryan)
About 800,000 people who purchased health insurance through HealthCare.gov
last year received incorrect tax information and have been asked to delay filing
their returns, Obama administration health officials said Friday, a misstep
affecting a critical part of the presidentfs signature health-care law.
The mistake could slow down tax refunds for many Americans who depend on
subsidies to afford coverage under the Affordable Care Act. Itfs also drawn
further criticism from Republican opponents, who say the error is just the
latest evidence that the law is frustrating Americans and unworkable.
After a bumpy debut more than a year ago, HealthCare.gov appeared to be
running smoothly in recent months. There were no major tech glitches. And just
days ago, the administration was trumpeting the wrap-up of an enrollment period
that surpassed the presidentfs goals.
But on Friday, administration officials said nearly one million customers had
been notified and asked to delay filing their returns for two or three weeks.
About 50,000 people who already filed their 2014 tax returns will likely have to
resubmit information to the federal government.
The subsidies are a significant part of the Affordable Care Actfs design. For
people earning too much to qualify for Medicaid in their states but who lack
other sources for health insurance, the subsidies can make or break whether they
can afford coverage.
The mistake also comes as the health-care law remains under significant
political pressure. The Supreme Court is getting ready to hear a case that could
eliminate subsidies in states that declined to run their own health
exchanges. If the justices rule against the subsidies, an estimated 8 million to
10 million people are expected to lose their health insurance.
On Friday, Republicans seized on the administrationfs error and a separate
announcement from officials that the government was extending enrollment for
taxpayers who could be hit with a penalty for not being insured.
gWhether itfs providing taxpayers with incorrect subsidy information or
having to create special enrollment periods so that taxpayers can avoid costly
penalties, Obamacare continues to frustrate and confuse Americans,h said Senate
Finance Committee chairman Orrin Hatch (R-Utah) in a statement. gThe
Administrationfs latest attempt to unilaterally tweak their own law to avoid
political fallout once again underscores the failed policies rooted in
Obamacarefs DNA.h
The error is tied to the local gbenchmarkh premiums the government uses to
calculate subsidy payments. The cost of the 2015 benchmark plan was listed on
some forms, instead of 2014, HHS explained in a blog post. The administration
isnft sure how this error occurred, said Andy Slavitt, a top administration
official overseeing the federal health insurance exchanges.
gWefre still investigating the cause,h Slavitt said on a press call
Friday.
In 2014, the first year of exchange operations, enrollees had two options for
receiving financial assistance.
The vast majority chose to receive the money up front based on their
projected income. Now that itfs tax season, those consumers need to reconcile
the credit if they received too little or too much during the year. The tax
preparation firm H&R Block estimates that federal support was too generous
for about half of subsidy recipients in 2014.
The rest of the enrollees elected to receive the money entirely during tax
season through a refund.
Consumers Union health policy director Lynn Quincy said waiting another two
or three weeks to file their return may be a challenge for low-income families
that are counting on a refund.
gThere are a lot of families who count on the refund to make large
purchases,h she said. gTo the extent that theyfre still getting a refund — which
we hope they are — it will be hard to wait these extra couple of weeks.h
Quincyfs group had been advising health-care shoppers to take as little as
possible of the premium subsidy in advance to avoid a potentially painful
process during tax season. However, she acknowledged that would make it
difficult for many to afford monthly premiums.
People who received subsidies under the health-care law must fill out a
1095-A tax form, indicating each household member who got coverage and how much
in subsidies the government provided each month. If someone received too much in
subsidies, he or she will have to pay it back.
gItfs not easy to figure this thing out, even for someone who know what this
is all about,h said Bob Williams of the nonpartisan Tax Policy Center.
The administration is urging people it notifies to delay filing their returns
until they receive the corrected 1095-A form, likely in early March. That could
further delay when this group receives tax returns that many low-income families
count on this time of year.
William said hefs unsure if this latest snag is going to affect consumer
behavior, since some people have already been struggling with the new
complex subsidy system. gI think this whole thing was going to cause problems,
but it does complicate things,h he said.
This latest wrinkle shows that the law, soon approaching its five-year
anniversary, is still a work-in-progress. This marks the first tax season that
tax filers are interacting with the new subsidy scheme, and administration
officials are trying to head off new potential headaches when they can. The
administration also announced new leeway for people who have to pay the new fine
for not having health insurance.
Fridayfs announcement came just days after a smoother 2015 ACA enrollment
period came to a close without major tech glitches. With the aid of a
better-functioning enrollment Web site, at least 11.4 million Americans signed
up for 2015 exchange health plans, putting the administration on target to beat
its enrollment goal for the year.
Uninsured Americans facing the tax penalty for not having health insurance in
2014 will have a new opportunity to sign up for 2015 health plans. People who
learn theyfre facing a penalty will now have between March 15 and April 30 to
sign up for coverage, the administration said Friday.
The unpopular mandate, which survived a Supreme Court challenge in 2015, was
built into the law to discourage people from waiting until they were sick to
sign up for coverage since they can no longer be rejected by insurance companies
because of a pre-existing medical condition. But Democratic lawmakers and
supporters of the law said it was unfair to punish people who werenft aware of
the penalty, which in 2014 was $95 or 1 percent of household income, whichever
is greater. The penalty in 2015 jumps to $325, or 2 percent of household
income.
gIt just makes sense to give these uninsured consumers a chance to purchase
insurance right away, rather than making them wait another year to get covered,h
said Enroll America president Anne Filipic, whose industry-backed group
coordinates enrollment efforts in key states. Administration officials suggested
the special enrollment period would be a unique allowance this year, as
consumers come to learn about the ACAfs new coverage system.