U.S.

800,000 Using HealthCare.gov Were Sent Incorrect Tax Data

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WASHINGTON — About 800,000 taxpayers who enrolled in insurancepolicies through HealthCare.gov received erroneous tax information from the government, and were urged on Friday to hold off on filing tax returns until the error could be corrected.
The Obama administration, under heavy pressure from congressional Democrats, also announced that it would give several million people more time to buy health insurance so they could comply with federal law and avoid tax penalties.
The tax problem, affecting taxpayers in 37 states, is the first big glitch in the federal health exchange’s second sign-up period — and is insignificant compared with the troubled rollout of 2013. Over all this year, the Affordable Care Act has beaten its enrollment targets, and insurance premiums have generally come in lower than expected.
Nonetheless, the mistake could prove to be a hardship, especially for the low-income workers who qualified for subsidized insurance policies and may be counting on tax refunds — but now must wait weeks to file their returns.

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The incorrect insurance information is used in computing taxes. Consumers can expect to receive corrected data in the first week of March. With the new data, officials warned, some taxpayers will owe more and some will owe less.
Officials said they did not know why the error had occurred.
Democratic lawmakers pressed hard for the Obama administration to open a “special enrollment period” around tax filing season for Americans who only then realize they face penalties for failing to purchase health insurance last year. Andrew M. Slavitt, the No. 2 official at the federal Centers for Medicare and Medicaid Services, said the period would last from March 15 to April 30.
When the regular open enrollment period ended Sunday, the Obama administration sent an email to consumers that said: “If you don’t sign up for health insurance today, you won’t be covered this year. So if you haven’t submitted your application and enrolled yet, this is your last chance.”
In fact, they will get another last chance. Mr. Slavitt described the special enrollment period as a one-time opportunity, and said it would not be repeated in future years.
Treasury officials said that up to six million people might be subject to tax penalties because they were uninsured in 2014. But health officials said they would help consumers obtain exemptions. Federal officials have authorized more than 30 types of exemptions from the penalty for not having insurance.
Millions of consumers received subsidies, in the form of tax credits, to help them pay premiums for coverage purchased through federal and state insurance exchanges last year. The credits were based, in part, on the consumers’ projected income for 2014 and the cost of a “benchmark plan.”
Mr. Slavitt said the government had discovered that the benchmark premiums were incorrectly reported on forms sent to 800,000 taxpayers, about one-fifth of all the forms mailed out by the federal government.
The error by the federal insurance marketplace is similar to what would happen if an employer reported inaccurate information on wages paid to an employee, or a corporation reported incorrect information about dividends paid to a stockholder.
Disclosure of the erroneous data sent to many taxpayers came after a three-month open enrollment period that was largely free of the troubles that frustrated consumers in late 2013.
Delaila Hernandez, center, a JPS Health Network patient navigator, helped Fred Cardenas with documents during an Affordable Care Act enrollment event last week in Fort Worth.LM Otero/Associated Press 
On Tuesday, President Obama said that 11.4 million people had selected private health insurance plans or renewed their coverage under the Affordable Care Act, proof, he said, that the law was working “better than we anticipated” — and better than critics said.
The new special enrollment period will be available to people in 37 states that use the federal insurance marketplace. Other states may follow the federal policy if they wish, administration officials said.
State-run exchanges in Minnesota and Washington had already announced this week that they were creating their own special enrollment opportunities. Minnesota said its extra enrollment period, from March 1 to April 30, would “lessen the tax burden for some Minnesotans” who would otherwise be penalized for lacking coverage in 2015.
The health care law requires Americans to have insurance, obtain an exemption or pay a tax penalty. Mr. Slavitt said the new special enrollment period was intended for people who had been unaware of the penalty, which the government calls a “shared responsibility payment.”
To qualify for the special enrollment period, consumers must certify that they filed their tax returns and paid the penalty for not having coverage in 2014. They must also certify that they “first became aware of, or understood the implications of, the shared responsibility payment after the end of open enrollment — Feb. 15, 2015 — in connection with preparing their 2014 taxes.”
It is not clear how the government could verify taxpayers’ claims about when they first realized the implications of the tax penalty. But the pressure to create the new enrollment opportunity was clear. Democrats like Senator Tammy Baldwin of Wisconsin and Representative Lloyd Doggett of Texas, who had urged the move, welcomed the announcement Friday.
“Taxpayers seeing the financial consequences of being uninsured will be able to enroll for coverage sooner, instead of being forced to wait for the next enrollment period,” Mr. Doggett said.
The special enrollment period serves three purposes to the administration. It will increase the number of people with health insurance, a goal long sought by Mr. Obama. It will reduce the number of people who must pay tax penalties, potentially reducing anger at the White House and opposition to the Affordable Care Act. And it will increase the number of people who receive health insurance subsidies and thus have a personal stake in a Supreme Court case challenging payment of the subsidies in more than 30 states.
If the court rules against the administration in that case, the White House says, it would cause hardship for many low-income people and chaos in insurance markets around the country. More than eight out of 10 people buying insurance through the public exchanges qualify for financial help.
Insurance companies are leery of extended enrollment deadlines, which scramble their timelines for setting policy rates. They also fear that consumers will disregard sign-up periods if they grow accustomed to fluid end dates.
“Given that this is a new process for consumers, this targeted special enrollment period is a sensible approach for those who qualify,” said Clare Krusing, a spokeswoman for America’s Health Insurance Plans, a trade group.