Breaking: Healthcare.gov sent out 800,000 bad tax forms; Update: Officials don’t know what happened?

posted at 10:31 am on February 20, 2015 by Ed Morrissey

The White House has some bad news for those ObamaCare-insured taxpayers who prepared for early tax filing — or actually had already filed. That form that they sent out about premiums and subsidies? More than ten percent of them turned out to be wrong [see update], so … you’ll have to either wait to calculate your taxes, or have a do-over:

The Obama administration says it sent about 800,000 HealthCare.gov customers the wrong tax information, and officials are asking those consumers to delay filing their 2014 taxes. …

The errors mean that nearly 1 million people may have to wait longer to get their tax refunds this year.

Seriously? One would think that after the debacle of last year’s rollout that HHS would have made doubly sure to get its ducks in a row, especially for the first tax season in which ObamaCare fines get enforced. Fifty thousand of the people affected have already filed their taxes, which means they have to resubmit them, likely at a substantial expense, given the complicated nature of the ObamaCare subsidies and their tax implications.

It’s not just the federal exchange, either. The Covered California system issued 100,000 erroneous tax forms, too. The AP has no word on other state exchanges, but it’s beginning to look like ObamaCare may snarl tax preparation for weeks.

Democrats had already begun panicking over tax season, and had been pressing HHS and the White House to extend open enrollment in order to allow some taxpayers to avoid fines for non-coverage. This morning, the Obama administration announced a new open-enrollment period in an attempt to avoid the political damage its program creates:

Taxpayers facing fines for not having health insurance in 2014 will get another chance to sign up for benefits on the Obamacare exchanges this year, federal officials announced Friday.

From March 15 through April 30, individuals who learn when they file tax returns that they must pay a penalty under the Affordable Care Act’s individual mandate can return to HealthCare.gov to choose a plan for the current year, Andy Slavitt, the principal deputy administrator of the Centers for Medicare and Medicaid Services, told [reporters] on a conference call.

The three-month Obamacare sign-up campaign officially ended Sunday, but President Barack Obama’s administration and some state authorities are reopening enrollment around tax time as a means of covering more uninsured people and mitigating the backlash from taxpayers who weren’t covered last year and discover they owe fines starting at $95 per person when they file their 2014 returns.

NBC’s Mark Murray is less than impressed:

It’s what happens when government exceeds its competence, and especially when they do so by arrogantly assuming they can make better decisions on free-market association than consumers and providers. Healthcare.gov has been an ongoing disaster — its “back end” still doesn’t work as designed, which I warned yesterday would create a huge amount of problems for Democrats in this tax season:

Taxpayers who buy individual coverage now have to get a new form, the 1095-A, to certify that they have suitable health insurance that meets the Obamacare individual mandate. If a taxpayer does not have insurance, they have to file a Form 8965 to see if a fine can be avoided.

For those who do have insurance, though, the 1095-A forms may not arrive for a while, especially for those who enrolled late in the period that just closed this weekend. If they don’t get the form, or if it’s not accurate (as USA Today warned two weeks ago), consumers will have to demand the form from their exchanges before they can file taxes at all.

Even for those Obamacare enrollees who do get their forms and have paid their premiums, an unpleasant surprise may await. Remember the lack of the back-end subsidy payment system and the estimated payments? The IRS certainly does.

In order to get their subsidies and reduced premium payments, consumers and insurers had to guess at taxable household income for 2014. Joint-filing households below 400 percent of poverty level (around $88,000) who used Obamacare and got subsidies could get hit with an additional $2500 in IRS clawbacks ($1250 for individuals) if annual taxable income outstripped those estimates. And thanks to the failure of HHS to have that back end ready in this cycle, the same thing will happen next year, too.

I hate to say I told you so, but … I’ve been saying this for almost six years. Even I didn’t think I’d get proven correct on the above prediction quite so quickly, though the real disasters of ObamaCare in this tax season are still to come — and more beyond that.

Update: A new update of the AP story explains that it’s precisely that subsidy-estimation calculation required by the back-end delay that created the error:

The errors disclosed Friday are in new forms that HealthCare.gov sent to millions of consumers receiving coverage through the federal insurance market that serves most states. Those forms, called 1095-As, are like a W-2 for health care. They provided a month-by-month accounting of the subsidies consumers received to help pay their premiums. That information is then used to make sure everybody got the right amount, not too much, or too little.

Andy Slavitt, a top administration official overseeing federal health insurance programs, said the administration is still investigating the root cause of the problem. Slavitt said it had to do with erroneous calculations of a “benchmark” premium that is used to help determine the amount of subsidies that individuals receive.

No one thought to test that out before tax season began?

Update: The New York Times says that 800,000 is “one-fifth of all the forms mailed out by the federal government.” Also, this is certainly a confidence-builder:

The incorrect insurance information is used in computing taxes. Consumers can expect to receive corrected data in the first week of March. With the new data, officials warned, some taxpayers will owe more and some will owe less.

Officials said they did not know why the error had occurred.

If that’s true, how will they know whether the new 1095-As are correct?


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Bmore

Schadenfreude on February 20, 2015 at 1:37 PM

What I don’t understand, if you didn’t have insurance in 2014 and are having to pay a fine at tax time, why would extending the enrollment time for 2015 be of help?

Aren’t you still going to owe the fine, since it is for 2014?

Barred on February 20, 2015 at 1:44 PM

This administration is doing so well. Aren’t you happy that it’s supervising your health care?

GarandFan on February 20, 2015 at 1:46 PM

But all the RIGHT people were in charge this time!

Mommys Little Darling on February 20, 2015 at 2:03 PM

What I don’t understand, if you didn’t have insurance in 2014 and are having to pay a fine at tax time, why would extending the enrollment time for 2015 be of help?

Aren’t you still going to owe the fine, since it is for 2014?

Barred on February 20, 2015 at 1:44 PM

The same people who are calling for an extension to the 2015 enrollment in an effort to fix a 2014 penalty are the same one’s who didn’t say anything when a member of the Democrat caucus worried that Guam might tip over. They are also the same people who wrote and passed the EpicClusterFark.

Restores your faith in government, doesn’t it?

Athos on February 20, 2015 at 2:05 PM

It is almost as though this chaos in intentional. Nah…they would not do that, would they

Techster64 on February 20, 2015 at 2:07 PM

What will happen if/when SCOTUS declares the IRS had no authority to interpret the wording of the 0bamacare law and issue subsidies to the states that did NOT create their own 0bamacare exchanges?

The lines for the tar and pitchfork brigades will not be pretty.

Mommys Little Darling on February 20, 2015 at 2:07 PM

It is almost as though this chaos in intentional. Nah…they would not do that, would they

What I don’t understand, if you didn’t have insurance in 2014 and are having to pay a fine at tax time, why would extending the enrollment time for 2015 be of help?

Aren’t you still going to owe the fine, since it is for 2014?

Barred on February 20, 2015 at 1:44 PM

It is the government, stop trying to make sense out of their chaos, where none exists.

Techster64 on February 20, 2015 at 2:10 PM

“Aren’t you still going to owe the fine, since it is for 2014?

Barred on February 20, 2015 at 1:44 PM”

DITTO. I don’t get it either…

I’m thinking it’s not long before HHS announces it is suspending individual mandate requirements for the 2014 tax year. That will allow the IRS the out it needs from this quagmire.

MaxBC on February 20, 2015 at 2:18 PM

Officials said they did not know why the error had occurred.
If that’s true, how will they know whether the new 1095-As are correct?

Barry loves ZeroCare and … racist!

corona79 on February 20, 2015 at 2:20 PM

But hey: Obama blasts, mocks GOP to cheering Democrats

Cognitive disconnect?

He recalled how for years, Republicans have warned of “doom and gloom and death panels and Armageddon.”

POTUS tells Republicans to stop trying to take away health insurance and deport families, saying they’re trying to “bamboozle folks.”

kcewa on February 20, 2015 at 2:34 PM

There are two issues on this post,

1. the form that people got to file there taxes for 2014, might be wrong, if you are one of 800,000 people your figures may not be correct on the document the government set you, so beware. I do not know how you know if you are one of them….

2. If you did not buy insurance last year, and now owe the penalty, they will let you Penalty Payers have another crack at buying insurance for 2015. You will not be one of the 800,000 waiting to see if you get a form, because that is only for people who got a subsidy last year.

Fleuries on February 20, 2015 at 3:06 PM

Check out this “ACA Survival Kit” for tax preparers.

http://www.healthreformbeyondthebasics.org/wp-content/uploads/2015/02/ACA-Survival-Kit_Feb2015.pdf

Tax returns just got much more complicated.

Pythagoras on February 20, 2015 at 3:14 PM

I’m moving all my employees to individual policies because the rates they get as individuals are cheaper than we get as a small group. We then pay 50% of a Silver Plan and allow the employees to get a better or worse plan depending on how risk averse they are. So, that 50% could actually pay their entire premium for a lesser plan or maybe only a quarter of a better plan. The choice is theirs.

Anyway, I was getting ready to hire a new employee and I called an insurance agent to get a quote on an individual policy for her. He asked me if she had maintained insurance for the last 60 days.This particular person has not had insurance in about 3 months. So, the agent told me that she can’t get an individual policy until next November. To me…that is absolutely insane. It’s like telling me that I can’t buy a car because it’s September or I can only get a haircut on days that start with the letter “T”. I mean, this person wouldn’t be going through the healthcare.gov website or an exchange, so why the hell should the government be able to tell her when she can and cannot buy something in a private transaction.

If they have screwed up healthcare this bad, I’m dreading to see how bad they f*ck up the Interwebs.

ReaganWasRight on February 20, 2015 at 3:26 PM

Surprise!!!!! Obama’s radical transformation of the USA is hitting on all cylinders. He has been executing his plan since day one. Getting unbelievable assistance from all the contractors who have pissed away even more of the taxpayers money than planned. What a great country we have with this transformation and all the previous years of drifting towards oblivion. Big brother knows best.

tomshup on February 20, 2015 at 3:39 PM

The look on Miss Bug Eyes’ face is a prototype for the looks on all the O-No-Care clients when they have to fill out a full 1040 instead of a 1040EZ for the first time – and pay back some or all of their O-No-Care subsidies.

Hey, where’s CurtZHP?

22044 on February 20, 2015 at 4:16 PM

My CPA will ask any new clients if they are on ACA. If they say yes he will not take them on. The paperwork is horrendes for tax preparers and I don’t blame him a bit. He also lost his plan since he is an independent businessman so he has no love for Obamacare.

warmairfan on February 20, 2015 at 4:21 PM

Alright… so they botched the website. And effed up the tax calculations. At least we can be secure knowing that our personal information is secure, right? Wait… what?

bofh on February 20, 2015 at 5:12 PM

Hey, where’s CurtZHP?

22044 on February 20, 2015 at 4:16 PM

I was in my bunk.

CurtZHP on February 20, 2015 at 5:19 PM

I was in my bunk.

CurtZHP on February 20, 2015 at 5:19 PM

Ha ha ha!

22044 on February 20, 2015 at 5:33 PM

Troll-free? You don’t say…

OhioJones on February 20, 2015 at 6:40 PM

Healthcare.gov sent out 800,000 bad tax forms

Can’t wait until the idiot collective called “government” kills a million or more citizens with bad medicine and/or flawed medical advice/directives.

landlines on February 20, 2015 at 8:10 PM

Were Harf and Psacki moonlighting at healthcare.gov?

onlineanalyst on February 20, 2015 at 8:21 PM

Hey, cACA happens.

Axeman on February 20, 2015 at 8:21 PM

So, nailing the people at HHS and the people who designed Healthcare.gov to crosses all the way up Pennsylvania Avenue as a warning to other federal parasites and a punishment for the trouble they’ve caused is, I suppose completely out of the question?
Yeah…thought so.

A pity, really. Worked rather well after the Spartacus revolt.
But then, the Romans had spines, and understood cause and effect.

orangemtl on February 20, 2015 at 9:33 PM

*facedesk*

Yakko77 on February 21, 2015 at 10:23 AM

Government caused disaster.

SpongePuppy on February 21, 2015 at 6:58 PM

Hey, cACA happens.

Axeman on February 20, 2015 at 8:21 PM

AesopFan on February 21, 2015 at 7:20 PM

When premiums decline y’all are going to be pissed!
libfreeordie on May 7, 2014 at 10:18 AM

Schadenfreude on February 20, 2015 at 1:18 PM

When is libfreeordie going to come out and tell me that everyone’s poor experiences with Obamacare are mistaken or false?

DevilishSoda on February 22, 2015 at 7:47 PM

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