The Los Angeles Times reports that California’s Obamacare exchange sent erroneous tax forms to about 100,000 households that received federal premium subsidies last year. At issue is Form 1095-A, which health-law exchanges must send to individuals and families showing how much money they received in 2014 from the federal government to subsidize their health insurance premiums. Covered California said it sent incorrect information on some forms because its customer data didn’t match what health plans had on file. For instance, there may have been a discrepancy for the person’s length of coverage in 2014 and amount of subsidy received.
Amy Palmer, an exchange spokeswoman, said the agency is reconciling that information and sending revised forms to the affected customers later this month. She said customers will also be notified by email when the updated forms are available in their online account. Overall, Covered California sent tax forms to more than 800,000 households statewide.
Obamacare customers who take taxpayer subsidies to cut down the price of health coverage must later fill out Form 1095-A, which documents how much money they received in subsidies in all of 2014. But the total amount of subsidies were incorrect for a large chunk of the exchange’s customers due to the disconnect between the exchange and health insurers. In some cases, the length of time a customer was insured was incorrect, changing the total amount of taxpayer assistance received.
The error affects 100,000 households in the state, out of 800,000 households that received Covered California forms in total. The accurate information is important for people when filing their 2014 taxes. Consumers may have to repay some portion of that government assistance as part of their tax return if their income was higher than what they estimated during enrollment. The blunder puts an extra burden on 100,000 households with Obamacare customers in California just ahead of tax season, who were already facing what experts warn will be the most complicated tax season ever. The 1095-A forms in question are new this year, the government’s answer to the complications Obamacare introduces into filing taxes. Each health-care exchange will issue the forms to customers who received subsidies in the form of tax subsidies. The federal government will issue about 4 million of the new 1095-A forms to Obamacare customers using the federal website this year.
Four in ten low-income Obamacare participants will face sticker shock this April 15 when they discover they owe a great deal of money to the IRS because of a little-known “clawback” provision in the health-care law. A family of four could owe the government as much as $11,200, according to a 2013 prediction by researchers at the University of California, Berkeley. Authors of the UC study, written by supporters of the health-care law, warned the repayment feature could kill future support for Obamacare. “Repayment requirements could lead to public dissatisfaction with the exchanges. And if there is much media attention to the need for repayments, some people could be dissuaded from participating in the exchanges,” they cautioned. The California researchers admitted even a $2,500 repayment could be devastating to a couple. “A repayment requirement of $2,500 could be a financial shock to a family of two earning $50,000 a year,” they stated.