Despite threats from IRS that this might be a “miserable” filing season, things seemed to be going reasonably well. Until now.
Today, the Obama administration announced that it sent out about 800,000 bad tax statements. The specific tax statement is form 1095-A, which is issued to those who purchased health care coverage through the Marketplace. The form 1095-A includes information about health care premiums paid and is used to calculate, among other things, your premium health care credit.
Here’s where things went awry this filing season. Some forms 1095-A included the monthly premium amount of the second lowest cost Silver plan for 2015 instead of 2014. Yes, you and I know that while it’s 2015, we’re filing our 2014 tax forms – but somehow that got lost at Healthcare.gov. Those folks reported amounts for the wrong year which is why the form needs to be corrected. You’ll see the potentially incorrect amount on Part III, Column B of form 1095-A.
If your form is incorrect, you’ll get a call and an email from the Marketplace. There will also be a message in your Marketplace account on HealthCare.gov. When your corrected form is ready, you’ll similarly be notified.
Here’s the bad news (as if that’s not bad enough already): those corrected forms should be available by early March, not in the next day or so. March. And since the information could potentially affect tax credits and therefore, tax refunds, taxpayers who received the bad tax statements are being asked to wait to file 2014 federal income tax returns.
If you absolutely can’t wait, you can figure the amount of the plan that applied to your household in 2014 on your own by either calling the Marketplace Call Center at 1-800-318-2596 (TTY: 1-855-889-4325) or going online. Of course, figuring it out on your own could be complicated – be willing to wait on the phone if you need assistance.
If you’ve already filed your return with the incorrect tax statement, you may have to amend your return. Estimates are that as many as 50,000 taxpayers have already filed using the bad tax statements – check your form 1095-A and wait to hear from Healthcare.gov to see if you’re affected.
The situation is similarly grim for taxpayers in California. Forms 1095-A generated by Covered California have problems, too. About 100,000 – or 1 in 8 of those covered by Covered California – received a bad tax statement in 2015. In this case, errors weren’t just limited to premium costs. Bad data on the forms include the wrong dates of coverage, errors in reporting the number of family members enrolled and policy changes.
Covered California spokesman James Scullary acknowledged the error, offering an apology “for any inconvenience.”
Unlike the federal snafu, California appears to have known about the problem beforehand. Covered California spokesperson Dana Howard told local media station KPIX 5 that there were discrepancies but forms were mailed out anyway, to beat the February 2nd deadline. He said about the decision, “We did not want to hold up sending out the 1095s to everybody, so that we can correct those that we did have.”
Apparently, California felt it was easier to “inconvenience” 100,000 people than to issue correct forms a little later.
All total, nearly 1 million people may have delayed refunds due to bad forms 1095-A. It’s not an auspicious beginning for Obamacare’s big tax debut: this is the first year that Marketplace premiums are linked to tax returns.
The story is still developing: I’ll post updates as they are made available.
