An estimated 3 million to 6 million individuals and households that face a tax penalty for not having health insurance in 2014 will get an extra 45 days to secure 2015 coverage – and thereby escape the same penalty next year.
The Obama administration announced the enrollment deadline extension Friday after prominent Democratic lawmakers had called for the move earlier this week.
The reprieve comes as 800,000 HealthCare.gov users are being asked to delay filing their income tax returns because of incorrect information on tax forms they received from the Department of Health and Human Services.
The Affordable Care Act’s individual mandate requires most Americans to purchase health insurance or face a fine, dubbed the Shared Responsibility Payment, when they file their income taxes by April 15.
The fine would be the larger of $95 or 1 percent of household income above the filing threshold. The fine for not having coverage in 2015 – payable in the 2016 tax-filing season – jumps to the larger of $325 or 2 percent of income.
People who didn’t know about the fee or understand its implications will be able to purchase 2015 coverage from March 15 to April 30.
Those who don’t purchase coverage may have to pay a penalty when they file their 2015 income taxes next year.
The special enrollment period extends only to residents of states that use the federal health insurance marketplace at HealthCare.gov, the website for the Affordable Care Act.
Eligible consumers must also have noted on their 2014 tax returns that they’ve paid the penalty for being uninsured in 2014 and that they became aware of or understood their responsibilities under the individual mandate only after the regular marketplace enrollment period ended Feb. 15.
“We recognize that this is the first tax-filing season where consumers may have to pay a fee or claim an exemption for not having health insurance coverage,” said Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services. “Our priority is to make sure consumers understand the new requirement to enroll in health coverage and to provide those who were not aware or did not understand the requirement with an opportunity to enroll in affordable coverage this year.”
About 75 percent of taxpayers need only check a box on their tax returns to indicate that they had 2014 health insurance through their employers, Medicare, Medicaid or any other qualified coverage. The other 25 percent of taxpayers will have to take different steps.
People who couldn’t afford health insurance could be exempted from the coverage mandate, along with a host of other groups, including immigrants who are in the U.S. illegally, prisoners, members of Indian tribes and those who are part of religious groups that oppose accepting health insurance benefits. Some 10 to 20 percent of taxpayers will qualify for exemptions from the coverage mandate.
An estimated 2 to 4 percent of taxpayers will pay the penalty because they ignored the coverage mandate and aren’t eligible for exemptions.
Those who were uninsured last year and want to see whether they qualify for an exemption can go to the new health coverage tax-exemption tool on HealthCare.gov or CuidadodeSalud.gov (Spanish-language).
In addition to the extra 45 days to enroll, the administration is asking 800,000 people in 37 states who signed up for health insurance through the online marketplace not to file their income taxes until March because tax statements they received from HHS contained incorrect information.
Those who received tax credits to help pay for marketplace coverage received a new federal income-tax form – 1095-A – that must be filed with their 2014 returns.
Roughly 20 percent of the forms incorrectly listed the amounts of the second-least-expensive coverage plans, known as “silver” or “benchmark” health plans, in the members’ areas. The cost of the benchmark plan determines the amount of the credit that taxpayers were eligible to receive.
About 90 to 95 percent of people who got the incorrect forms haven’t yet filed their income taxes. HHS wants those people to wait until they receive corrected forms before they file their returns, or to check the HealthCare.gov website for the correct benchmark rates.
“For those who have filed their taxes – approximately 50,000 (HHS wrote in a blog on its website Friday.
Most people can access copies of their 1095-A forms through their HealthCare.gov accounts. A message when they log in will inform consumers whether their forms were affected.
“We have been urging consumers to check the information on their forms – such as the number of people in your household – for accuracy. People who find errors on their form can contact the Marketplace Call Center at 1-800-318-2596 to find out how to request a corrected form,” the HHS blog notes.
“As soon as we discovered the error, we immediately began examining who was affected, how to communicate about the error and how to make the corrections process as simple as possible for consumers,” the blog says.
Some 80 percent of consumers received accurate 1095-A forms, HHS reports. It adds that the incorrect form “does not mean that consumers received the incorrect amount of tax credit throughout the year.”
People with incorrect forms will get phone calls from HHS by early March, along with letters and emails providing additional information about the status of their forms. The HHS blog answers other questions as well.
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