Obamacare Error Complicates 2014 Tax Returns

Is it true that the government sent 800,000 people inaccurate tax forms reporting health insurance information? How do I know if I'm affected by this, and if so, what should I do?

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What you heard is true. As if tax filing weren’t complicated enough for people who received health insurance subsidies in 2014, now they also have to worry about whether or not they received inaccurate forms reporting the information.

If you bought health insurance through a marketplace, you should have already received Form 1095-A, "Health Insurance Marketplace Statement." It includes information about your monthly premium, the benchmark premium that was used to calculate the subsidy premium (the marketplace’s second-to-lowest-cost silver plan) and the amount of any subsidy you received to help cover premiums (also called the "advance premium tax credit). But the U.S. Department of Health and Human Services announced last week that about 800,000 people who bought coverage through the marketplaces run by the federal government received a Form 1095-A reporting incorrect benchmark premium amounts, which would cause them to calculate inaccurate subsidies when filing their tax returns.

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This error affects about 20% of the people who bought coverage through the 37 federally facilitated marketplaces at HealthCare.gov. It does not affect people who bought coverage through the state-run marketplaces. Plus, the error was on the tax form only. If you received a subsidy throughout the year, it wasn’t based on the wrong benchmark premium.

About 50,000 people who received an incorrect Form 1095-A already filed their tax returns. The Treasury Department announced that they will not be required to file amended returns, and if you owe more money based on updated information in the corrected forms, the IRS will not try to collect additional taxes. However, you may want to file an amended return and get a refund if the new numbers lower your tax liability. (This would be the case if the accurate benchmark premium is higher than the one you used when you originally filed your tax return.) For more information, see the Treasury Department's statement.

If yours was one of the inaccurate forms, you should be receiving a phone call and an e-mail in the next few days from the marketplace where you bought the coverage, plus an updated Form 1095-A by early March. Instead of waiting for the notice, you can log into your HealthCare.gov account to find out whether your Form 1095-A is being corrected (after you log in, select your 2014 application, then "tax forms"). If you received an inaccurate form, the government is recommending that you wait until the first week of March, after you receive the correct information, to file your taxes. If you need to file your tax return now, you can use this tool to find the correct number to use as the benchmark premium in your area.

It’s also a good idea to check the rest of the information on your Form 1095-A for accuracy, such as the number of people in your household. Call the Marketplace Call Center at 800-318-2596 to report any errors. You can also call that number with other questions about how the health care law affects your tax filing, or visit www.healthcare.gov/taxes. For more information, see this information from the Centers for Medicare & Medicaid Services, and this HealthCare.gov page.

For more information about the health care law and your taxes, whether you have coverage through your employer or you bought it through the marketplace, an agent or directly from an insurer, see How Obamacare Affects Your 2014 Tax Return and How Obamacare Complicates the Filing of Your 2014 Tax Return.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.