April 15—Tax Day—was already bad enough. Not only is it an utter hassle to figure out an increasingly complex tax code, it’s a painful reminder of how big the federal government has become. But this year it’s set to get worse and it’s all due to Obamacare.
First, there is the rash of new forms. Taxpayers now have to file a 1095-A, which certifies that they purchased insurance that meets Obamacare’s individual mandate requirements. If a taxpayer opted not to purchase insurance then they have to file a Form 8965 to see if they meet one of the myriad exceptions to the new fine for being uninsured.
For instance, the mandate was suspended for people who had their existing insurance policy canceled because it doesn’t meet new ACA standards, and for people who “consider other available policies unaffordable,” and for people who “experienced another hardship in obtaining health insurance.” In other words if you want an exemption you can have one…assuming you know the rules.
As it turned out, many didn’t know the rules. The Washington Post reports that “up to 6 million Americans are expected to pay a penalty for not having coverage in 2014.” Worse, they won’t learn that they owe the penalty until after they filed their taxes, at which point they will have missed out on the open enrollment period for next year as well.
Or at least that’s what would have happened under the law as written. But Democrats, sensing a serious political vulnerability, complained and got the White House to create yet another exception. Now, so long as consumers can “attest that they first became aware of, or understood the implications of, the Shared Responsibility Payment [a euphemism for the individual mandate] after the end of open enrollment . . . in connecting with preparing their 2014 taxes.”
If all that wasn’t complicated enough, the government ran into a snafu this week by sending out incorrect 1095-A forms. The Associated Press reports:
In a new setback for the health care law and the people it’s supposed to help, the government said Friday it made a tax-reporting error that’s fouling up the filings of nearly a million Americans.
Officials said the government sent the wrong tax information to about 800,000 HealthCare.gov customers, and they’re asking those affected to delay filing their 2014 returns. The issue involves a new government form called a 1095-A, which is like a W-2 form for health care for people who got subsidized private coverage under Obama’s law.
As a result of the glitch, some taxpayers could either be told they owe more in taxes than they really do or are being refunded more money than they should receive. In an effort to avoid the problem the impacted taxpayers are being told to wait to file their taxes, which will delay access to their refund.
The complications don’t stop there.
Internal documents that became public over the summer showed that the government was paying incorrect subsidies to more than one million Americans. The problem was that in order to get the subsidies consumers had to guess at their taxable income. Unsurprisingly, many listed income that was significantly out of line with data that the IRS had on file.
Consumers were notified that they needed to submit proof of their income, but the federal government lacked the IT capability to match the files. As a result, millions of people were receiving larger subsidies than they should have been, a fact they won’t learn until tax time, when will be asked to pay back the excess.
Confused. We are too. But what else did you expect when the government took over health insurance?