U.S. Sends Wrong Health Tax Information

By | February 23, 2015

The U.S. said it sent 800,000 Americans incorrect information that may affect how much they owe in taxes this year because of subsidies they got to help pay for health insurance under Obamacare.

People affected by the error are being asked to hold off on filing 2014 tax returns. About 50,000 people have already sent in their returns and will need to re-file, Andy Slavitt, principal deputy administrator at the Centers for Medicare and Medicaid Services, said on a conference call Friday.

The tax error comes as Americans are finding out for the first time if they’ll owe a penalty for not having health insurance, as required by the Patient Protection and Affordable Care Act. People who didn’t get covered will face a tax penalty for the first time of as much as 1 percent of their income. If they remain uncovered this year, the fine may as much as double. Income tax filings are due April 15.

Also Friday, the administration announced that Americans who face a fine when they file their 2014 taxes will have a special six-week period when they can buy 2015 coverage an avoid the penalty next tax season. Regular sign-ups ended on Feb. 15. The special period will run from March 15 through the end of April, Slavitt said.

“Our intention that this is one year only for people who have not been in the communication loop,” he said.

Tax Penalties

The Treasury Department has estimated as many as 6 million people may owe the penalty for not carrying insurance in 2014. About 11.4 million people have signed up for insurance this year under the Patient Protection and Affordable Care Act.

Those that use the special enrollment period must attest that they paid the fine for last year already and that they first became aware of the consequence for not having health insurance while filing their taxes.

Consumers in 37 states that rely on healthcare.gov instead of state-run insurance marketplaces will be eligible for the extra sign-up. States that operate their own marketplaces will need to decide whether they’ll hold their own special enrollment.

New York said that it would also hold a special enrollment period for people who have to pay a penalty this year. New Yorkers facing a 2014 penalty will be able to sign up for health coverage from March 1 through April, the state’s insurance marketplace said in an e-mailed statement.

The administration will also add a feature to healthcare.gov that helps consumers determine whether they’re eligible for a waiver from having insurance so they can avoid the tax penalty.

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