Obamacare tax glitch, The 800,000 Americans who’ve just gotten erroneous tax forms for their Obamacare subsidy can blame a glitch in HealthCare.gov that used the wrong year’s data for the calculations.
Or, as one government health source put it, “an intermittent defect in code” that may cause tens of thousands of people to have to refile their taxes.
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Precisely how and where that mistake was made is still being investigated. Whether it was a coding error or greater technological flaw, it’s only the latest sign that HealthCare.gov still has deep troubles despite a second enrollment season that went far more smoothly than the first.
The major glitch, which officials announced Friday, is yet another embarrassment for the Obama administration — and another obstacle for people trying to work their way through the confusing first tax season under the Affordable Care Act.
Hundreds of thousands of taxpayers will have to wait for at least a few weeks to get corrected versions of the form, called the 1095-A. And up to a few million Americans probably have to log onto HealthCare.gov to find out if their form was among the botched many.
HealthCare.Gov used 2015 insurance prices when it was supposed to do math with 2014 numbers. The subsidies themselves were right, federal officials said as they revealed the mess. But the tax paperwork was not.
More than a piece of paper is at stake here. The snafu immediately reopens the door to GOP jabs about competence and the unwieldiness of the big government health care law. And it comes as many taxpayers are learning for the first time that they face penalties for being uninsured or a tax bill if they overstated their income and got too big a subsidy.
Others may get happier tax filing news — in the form of a refund — if their subsidy was too small. Poll after poll has shown the public still doesn’t understand the five-year-old law very well, and the confusion and anger is likely to generate another wave of scalding headlines linking Obamacare and taxes.
The White House acknowledged the self-inflicted wound.
“It certainly is something we want to make sure doesn’t happen again,” White House press secretary Josh Earnest said Friday afternoon.
The Centers for Medicare and Medicaid Services wouldn’t comment on the specific component of HealthCare.gov that’s supposed to generate the tax forms. The agency did say that the system used 2015 insurance information when it should have used 2014 for the tax forms. But it’s only the forms that were wrong; the system calculated the actual subsidies correctly.
During a call with reporters, officials only explained that there were “intermittent” problems with the creation of the tax forms and that they “were investigating.”
Later in a blog post, CMS said that “[a]s 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 … 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.”
Deputy Administrator Andy Slavitt said all of the affected individuals are being notified by phone and email and will receive corrected forms early next month. About 50,000 of those 800,000 Americans have already filed their taxes based on the wrong subsidy amount. The rest are being asked to hold off until they get the right information.
CMS said that people who need to file immediately should contact its call center or use an online tool at HealthCare.gov to identify the correct cost of the benchmark plan on which their subsidy is based.
That’s little consolation, suggested Mark Ciaramitaro, vice president of health care services at H&R Block.
“The unfortunate reality is that for many of these impacted taxpayers, the tax refund could be the single largest financial payout of the year,” he said. “For those who have not filed, through no fault of their own, they are being told to wait to file a tax return, further delaying access to their tax refund.”
On Capitol Hill, the health care law’s opponents quickly attacked the administration over the tax form glitch.
“Obama Administration ‘Scrambling’ To Fix ‘Error On Crucial Forms’” read a release from Senate Republicans.
And GOP Tennessee Rep. Diane Black faulted the White House’s “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.”
Although a Treasury spokesperson said the department and the IRS are “reviewing the issue and will be providing additional information shortly,” representatives from two tax preparation trade groups laid the blame totally on CMS.
“Is this IRS’s fault? No, Form 1095-A is prepared and provided by the Marketplace,” said Kristin Esposito, senior technical tax manager for the American Institute of CPAs. “The IRS had nothing to do with the preparation or sending out of this form.”
Some state exchanges have also run into problems with the 1095-A. Covered California officials apologized this week for sending 100,000 incorrect forms to its enrollees.
The morning disclosure was paired with CMS’s announcement of a special six-week enrollment period for the many Americans who are suddenly realizing they have to pay a penalty for being uninsured last year — and hope to avoid even bigger fines next year. Officials estimate that about 2 percent to 4 percent of taxpayers will be hit with a 2014 penalty.
This one-time opportunity, as Slavitt described it, will run from March 15 to April 30. Individuals will have to show that they paid a penalty for not having 2014 coverage and say that they first learned that they were subject to Obamacare’s individual mandate fine after regular enrollment ended Feb. 15.
“Our intention is one year only for people who have not been in the communication loop around the tax penalty,” Slavitt said.
The law’s mandate requires almost all individuals to have coverage for at least nine months of the year. The penalty for not doing so in 2014 is $95 or 1 percent of a person’s household income, whichever is larger. In 2015, the penalty increases to $325 or 2 percent of household income, again depending on which is larger.
About three-quarters of taxpayers will only need to check a box as they file signaling that they were insured last year through an employer, Medicare, Medicaid or other qualified coverage. Between 10 percent and 20 percent of taxpayers will qualify for an exemption from the mandate, according to CMS.
People who sign up during the special enrollment period won’t gain coverage until April or even May, so they’ll still be subject to a portion of the 2015 penalty.
Several state-based exchanges are opening similar sign-up periods, and consumer groups had pressured federal officials for a special enrollment window so that people who weren’t aware of the mandate fines wouldn’t be penalized two years in a row.
“Even though the second enrollment period was a big success, there remain millions of people who are unaware of the premium subsidies that make insurance affordable and who didn’t know about the tax penalty for failing to buy insurance,” Families USA Executive Director Ron Pollack said in a statement Friday. “This special enrollment period will therefore be a helpful, teachable moment and will enable many people to obtain health coverage and avoid future penalties.”
The main insurance industry trade group, America’s Health Insurance Plans, reacted positively to the administration’s announcement. “Given that this is a new process for consumers, this targeted special enrollment period is a sensible approach for those who qualify,” AHIP spokeswoman Clare Krusing said.
Or, as one government health source put it, “an intermittent defect in code” that may cause tens of thousands of people to have to refile their taxes.
Story Continued Below
Precisely how and where that mistake was made is still being investigated. Whether it was a coding error or greater technological flaw, it’s only the latest sign that HealthCare.gov still has deep troubles despite a second enrollment season that went far more smoothly than the first.
The major glitch, which officials announced Friday, is yet another embarrassment for the Obama administration — and another obstacle for people trying to work their way through the confusing first tax season under the Affordable Care Act.
Hundreds of thousands of taxpayers will have to wait for at least a few weeks to get corrected versions of the form, called the 1095-A. And up to a few million Americans probably have to log onto HealthCare.gov to find out if their form was among the botched many.
HealthCare.Gov used 2015 insurance prices when it was supposed to do math with 2014 numbers. The subsidies themselves were right, federal officials said as they revealed the mess. But the tax paperwork was not.
More than a piece of paper is at stake here. The snafu immediately reopens the door to GOP jabs about competence and the unwieldiness of the big government health care law. And it comes as many taxpayers are learning for the first time that they face penalties for being uninsured or a tax bill if they overstated their income and got too big a subsidy.
Others may get happier tax filing news — in the form of a refund — if their subsidy was too small. Poll after poll has shown the public still doesn’t understand the five-year-old law very well, and the confusion and anger is likely to generate another wave of scalding headlines linking Obamacare and taxes.
The White House acknowledged the self-inflicted wound.
“It certainly is something we want to make sure doesn’t happen again,” White House press secretary Josh Earnest said Friday afternoon.
The Centers for Medicare and Medicaid Services wouldn’t comment on the specific component of HealthCare.gov that’s supposed to generate the tax forms. The agency did say that the system used 2015 insurance information when it should have used 2014 for the tax forms. But it’s only the forms that were wrong; the system calculated the actual subsidies correctly.
During a call with reporters, officials only explained that there were “intermittent” problems with the creation of the tax forms and that they “were investigating.”
Later in a blog post, CMS said that “[a]s 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 … 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.”
Deputy Administrator Andy Slavitt said all of the affected individuals are being notified by phone and email and will receive corrected forms early next month. About 50,000 of those 800,000 Americans have already filed their taxes based on the wrong subsidy amount. The rest are being asked to hold off until they get the right information.
CMS said that people who need to file immediately should contact its call center or use an online tool at HealthCare.gov to identify the correct cost of the benchmark plan on which their subsidy is based.
That’s little consolation, suggested Mark Ciaramitaro, vice president of health care services at H&R Block.
“The unfortunate reality is that for many of these impacted taxpayers, the tax refund could be the single largest financial payout of the year,” he said. “For those who have not filed, through no fault of their own, they are being told to wait to file a tax return, further delaying access to their tax refund.”
On Capitol Hill, the health care law’s opponents quickly attacked the administration over the tax form glitch.
“Obama Administration ‘Scrambling’ To Fix ‘Error On Crucial Forms’” read a release from Senate Republicans.
And GOP Tennessee Rep. Diane Black faulted the White House’s “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.”
Although a Treasury spokesperson said the department and the IRS are “reviewing the issue and will be providing additional information shortly,” representatives from two tax preparation trade groups laid the blame totally on CMS.
“Is this IRS’s fault? No, Form 1095-A is prepared and provided by the Marketplace,” said Kristin Esposito, senior technical tax manager for the American Institute of CPAs. “The IRS had nothing to do with the preparation or sending out of this form.”
Some state exchanges have also run into problems with the 1095-A. Covered California officials apologized this week for sending 100,000 incorrect forms to its enrollees.
The morning disclosure was paired with CMS’s announcement of a special six-week enrollment period for the many Americans who are suddenly realizing they have to pay a penalty for being uninsured last year — and hope to avoid even bigger fines next year. Officials estimate that about 2 percent to 4 percent of taxpayers will be hit with a 2014 penalty.
This one-time opportunity, as Slavitt described it, will run from March 15 to April 30. Individuals will have to show that they paid a penalty for not having 2014 coverage and say that they first learned that they were subject to Obamacare’s individual mandate fine after regular enrollment ended Feb. 15.
“Our intention is one year only for people who have not been in the communication loop around the tax penalty,” Slavitt said.
The law’s mandate requires almost all individuals to have coverage for at least nine months of the year. The penalty for not doing so in 2014 is $95 or 1 percent of a person’s household income, whichever is larger. In 2015, the penalty increases to $325 or 2 percent of household income, again depending on which is larger.
About three-quarters of taxpayers will only need to check a box as they file signaling that they were insured last year through an employer, Medicare, Medicaid or other qualified coverage. Between 10 percent and 20 percent of taxpayers will qualify for an exemption from the mandate, according to CMS.
People who sign up during the special enrollment period won’t gain coverage until April or even May, so they’ll still be subject to a portion of the 2015 penalty.
Several state-based exchanges are opening similar sign-up periods, and consumer groups had pressured federal officials for a special enrollment window so that people who weren’t aware of the mandate fines wouldn’t be penalized two years in a row.
“Even though the second enrollment period was a big success, there remain millions of people who are unaware of the premium subsidies that make insurance affordable and who didn’t know about the tax penalty for failing to buy insurance,” Families USA Executive Director Ron Pollack said in a statement Friday. “This special enrollment period will therefore be a helpful, teachable moment and will enable many people to obtain health coverage and avoid future penalties.”
The main insurance industry trade group, America’s Health Insurance Plans, reacted positively to the administration’s announcement. “Given that this is a new process for consumers, this targeted special enrollment period is a sensible approach for those who qualify,” AHIP spokeswoman Clare Krusing said.
