ObamaCare Update- Newest Government Glitches

The New York Times reported last Friday that approximately 800,000 taxpayers who obtained insurance through HealthCare.gov in 2014 received erroneous tax reporting information from the government.  They are being urged to delay filing tax returns until corrected information can be sent to them.

The erroneous information relates to tax credits to help individuals pay premiums for insurance coverage purchased through federal and state insurance exchanges.  Credits were based in part on projected income for 2014 and the cost of a “benchmark plan” offered through the exchanges. According to the Administration, benchmark premium information was incorrectly reported on the forms sent to taxpayers.

Corrected information reportedly will be sent out sometime during the first week in March. Taxpayers are being advised that the new data will show that some taxpayers will owe more than the original information showed, while others will owe less.

The Obama Administration also has announced that a new “special enrollment period” will be held from March 15 through April 30 for taxpayers who did not take advantage of the open enrollment period that extended from November 15, 2014 through February 15, 2015.  The special enrollment period will be open to individuals in 37 states that use the federal exchanges.  State exchanges may, but are not required to, adopt the special enrollment period or, as in Minnesota and Washington, adopt special enrollment periods of their own.

To qualify for the federal special enrollment period, taxpayers must certify that they filed tax returns and paid individual responsibility penalties for not having health insurance for 2014.  They also must certify that they first became aware of or understood the implications of not having health insurance after February 15, 2015 and in connection with preparing 2014 tax returns.

According to the IRS, as many as six million people may be subject to individual responsibility payments for 2014.  But the government has said that it will help people get one or more of the 30 types of exemptions from the penalty for not having health insurance.

For employers, the significance of this news is that, apparently, quite a number of individuals are discovering for the first time that they owe penalty tax payments to the IRS because they did not have health insurance in 2014 and that they may be liable for more tax payments in 2015 unless they can take advantage of a special enrollment period.  Accordingly, employers may be under greater pressure than perhaps they expected to offer employer-provided health insurance to previously excluded employees and employee groups.