Fresh off another victory lap last week, Obamacare supporters awoke last Friday to the news that the government had given nearly one million exchange enrollees incorrect tax forms that could significantly affect their tax returns. 800,000 enrollees in the federal exchange and roughly 100,000 in California were given the wrong forms, called 1095-As, which provide a monthly account of the premium subsidies exchange enrollees receive. The government uses that information to determine that the subsidy amounts are correct (although a pending Supreme Court case raises questions about the legality of any subsidies offered through the federal exchange). Enrollees using the wrong information when filing their taxes would make it impossible for the government to verify that they got the right amount of subsidies.
Government officials will now try to remedy their mistake by sending out new forms to the affected customers. These tax documents contained the wrong price for the ‘benchmark plan’, the second-lowest cost silver plan available that is used to calculate the exchange subsidy amount. A post on the HealthCare.gov blog explains that the erroneous forms included the benchmark plan premiums for 2015 instead of 2014, which led to the wrong subsidy amount being displayed on the forms people use to file their taxes. The errors are not confined to one area, so incorrect forms were sent throughout the country, making it harder for enrollees to know if they are affected. Those given the wrong form will be able to access their corrected one sometime in early March, according to the report. 50,000 people in this group have already filed their taxes using the incorrect tax information. Officials are now in the process of trying to contact this group, and they will likely have to resubmit their tax returns. Enrollees who already filed will not find much help at HealthCare.gov for now, which only reads: “Additional information will be provided shortly.” Overall, nearly one million exchange enrollees could see delays in getting their income tax refunds, or find that their size of the refund has changed due to corrections in the tax form. Many of these people depend on this tax refund, and unanticipated problems could have significant adverse consequences.
Filing taxes is already a cumbersome and aggravating process. Obamacare has made it even more arduous as people have to attest to having health insurance coverage and how much they receive in exchange subsidies. Even worse, it nearly one in five HealthCare.gov customers was sent the wrong forms, and these people will have to delay filing their taxes, or even resubmit them. While this blunder will not cause the law to spiral out of control, it does reveal the potential for ongoing problems with its implementation. Following the news, HealthCare.gov CEO Kevin Counihan told reporters “We’re not doing any victory laps.” Other Obamacare supporters should take this lesson to heart.