Approximately 800,000 taxpayers who received health care coverage through the federal insurance marketplace Healthcare.gov were sent the wrong information on their Form 1095-A and are being urged to wait to file their taxes until the first week of March when they receive the correct information from the federal government.
“About 20 percent of the tax filers who had Federally-facilitated Marketplace coverage in 2014 and used tax credits to lower their premium cost —about 800,000 (< 1% of total tax filers) —will soon receive an updated Form 1095-A because the original version they were issued listed an incorrect benchmark plan premium amount,” said a blog post on the Web site of the Centers for Medicare and Medicaid Services. “Based upon preliminary estimates, we understand that approximately 90-95% of these tax filers haven’t filed their tax return yet. We are advising them to wait until the first week of March when they receive their new form or go online for correct information before filing. For those who have filed their taxes—approximately 50,000 (< 0.05% of total tax filers) —the Treasury Department will provide additional information soon.”
CMS noted that taxpayers who received health coverage under the Affordable Care Act should have received a statement in the mail in February from the health insurance marketplace called a Form 1095-A. The statement includes important information needed to complete and file their tax returns. One piece of information included on the 1095-A is the premium amount for the “second lowest cost Silver plan” in the taxpayer’s area. This premium amount represents the benchmark plan used to determine the amount of premium tax credit they were eligible to receive. Unfortunately that information was calculated incorrectly for many taxpayers, although CMS stressed that it won’t be an issue for the majority who received health coverage through Healthcare.gov.
“It’s important to note that this issue does not affect the majority of Marketplace consumers and only affects people who signed up through one of the 37 states using HealthCare.gov,” said CMS. “About 80 percent of Marketplace consumers who received a 1095-A from the federal Marketplace do not have affected forms and should go ahead and file their annual tax return. Additionally, this issue does not mean that consumers received the incorrect amount of tax credit throughout the year. It’s also important to note that this does not affect the vast majority of tax filers who will just need to check a box on their tax return to indicate that they had health coverage in 2014 either through their employer, Medicare, Medicaid, veterans care, or other qualified health coverage programs.“
CMS noted that taxpayers whose forms were affected will receive a phone call about the problem from the Marketplace by early March, in addition to letters and emails with additional information about the status of their forms.
Taxpayers who are concerned about the status of their 1095-A forms can find out if they are affected by logging in to their account at HealthCare.gov. They will see a notice message that will let them know if their form was or was not affected. Approximately 80 percent of tax filers with Marketplace coverage through HealthCare.gov who received a 1095-A will find that their form was not affected by the issue, according to CMS, and will be able to file their taxes with their current form.
If their form was affected, CMS advised them to wait to file their tax return until they receive a corrected 1095-A Form from the Marketplaces. New forms will be sent from the Marketplace beginning in early March and taxpayers will also receive a message in their Marketplace account on HealthCare.gov.
If taxpayers need to file their taxes before them, CMS is making available a tool to help them determine the correct amount of the second lowest cost Silver plan that applied to their household in 2014. They can also call the Marketplace Call Center at 1-800-318-2596 (TTY: 1-855-889-4325) for assistance.
CMS said it acted quickly once it learned about the problem. “As soon as we discovered the error, we immediately began examining who was affected, how to communicate about the error, and how to make the corrections process as simple as possible for consumers,” said CMS. “We are committed to making sure that consumers who need corrected forms are contacted with updates and will receive new forms quickly. We are focused on making sure that every Marketplace consumer understands how taxes and health care intersect and if they need to get a corrected form, the steps they need to take.”
An unidentified Treasury spokesperson also issued a statement on the announcement about the 1095-A Forms. “Today, CMS announced that approximately 800,000 1095-A forms containing errors were issued to Marketplace consumers,” said the spokesperson. “CMS is in the process of notifying affected individuals and the Marketplace will be issuing corrected forms in early March. Affected individuals who have not yet filed their taxes should wait to file until they receive their corrected form. For affected individuals who have already filed their taxes, the IRS and Treasury are currently reviewing the issue and will be providing additional information shortly.”
Separately, CMS also announced Friday that it will implement a special enrollment period for individuals who learn, at the time they file their taxes, of the Affordable Care Act-mandated tax penalty for not having health insurance coverage (see CMS Announces Special Tax Season ACA Enrollment Period).
Several lawmakers in Congress expressed their outrage about the glitch. Rep. Diane Black, R-Tenn., a member of the House Ways & Means Health Subcommittee and a nurse for more than 40 years, said in a statement, “The Obama Administration has built a healthcare law so complex, so confusing, and so costly that even they don’t know how to properly administer it. From a faulty website, to staggering cost estimates, to more Administration-led delays, the hits just keep coming under Obamacare. Now, the White House tells us in a classic Friday news dump that nearly one million Americans could see their tax refunds delayed because of this President’s inability to implement his own law. This is beyond embarrassing for President Obama and is an unfair blow to taxpayers who are once again left holding the bag for this Administration’s incompetence. Moreover, it is yet another example of why the House voted earlier this month with my support to repeal this disastrous law once and for all.”
Senate Finance Committee chairman Orrin Hatch, R-Utah, also issued a statement criticizing the Obama administration for the problem. “While the Administration struggles with how to enforce the individual mandate, taxpayers and patients are suffering the real consequences of the law,” he said. “Whether it’s 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. The Administration’s latest attempt to unilaterally tweak their own law to avoid political fallout once again underscores the failed policies rooted in Obamacare’s DNA.”