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:
Always-shifting deadlines MT @sarahkliff: Official: WH sets special enrollment period for uninsured who didn’t know about tax penalties.
— Mark Murray (@mmurraypolitics) February 20, 2015
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?