Income Tax Refunds Messed Up for almost a Million by Obamacare

The Affordable Care Act is interfering with the income tax refunds of about a million people.

obamacare death star

The first number reported is 800,000.

So reports the Associated Press:

About 800,000 HealthCare.gov customers got the wrong tax information from the government, the Obama administration said Friday, and officials are asking those affected to delay filing their 2014 returns.

But as you follow the story, you learn that another hundred thousand were messed up by the California insurance exchange.

Then you learn that an additional fifty thousand “or so” may be required to resubmit their already filed tax returns.

[See also, “Obamacare: IRS Fining Millions of Americans for 2014.”]

So that is 950,000 people—just between California and healthcare.gov.

The errors mean that nearly 1 million people may have to wait longer to get their income tax refunds this year. And they could also affect the size of those refunds.

But what are the chances that none of the other states’ health exchanges had similar problems? It wouldn’t surprise me at all if the number turned out to be well over a million.

The tax error highlights the complicated links between Obama’s health care law and taxes, connections that consumers will experience for the first time this year. The law subsidizes private health insurance for people who don’t have access to job-based coverage.

By delivering those subsidies through the income tax system, the White House and the law’s supporters were able to tout the health care overhaul as a tax cut. But it also introduced new wrinkles to an already-complicated tax system.

The errors disclosed Friday are in new forms that HealthCare.gov sent to millions of consumers receiving coverage through the federal insurance market that serves most states. Those forms, called 1095-As, are like a W-2 for health care. They provided a month-by-month accounting of the subsidies consumers received to help pay their premiums. That information is then used to make sure everybody got the right amount, not too much, or too little.

Andy Slavitt, a top administration official overseeing federal health insurance programs, said the administration is still investigating the root cause of the problem. Slavitt said it had to do with erroneous calculations of a “benchmark” premium that is used to help determine the amount of subsidies that individuals receive.

It’s unclear how the error would affect consumers, Slavitt said. He said it’s a mix of people who would have gotten too much assistance with their premiums, or too little.

Incredibly, along with this bad news is a different kind of bad news buried in the story and not even mentioned in the headline.

Federal officials also announced Friday a special sign-up extension for uninsured people facing the health care law’s tax penalties for the first time this year.

Several million households could benefit from that grace period, which had been sought by Democratic lawmakers in Congress. Uninsured people who go to file their taxes and learn they’re facing a penalty will have between March 15 and April 30 to sign up for subsidized coverage through HealthCare.gov. The fines for being uninsured are going up in 2015.

So once again the Obama Administration is changing the law because it is too damaging the way it was passed by (only Democrats in) Congress.

No one actually likes this law—not even its defenders and creators. Otherwise, they wouldn’t be constantly changing it.