Tardy filers risk loss of subsidies
WASHINGTON — Sign-up season for President Barack Obama’s health care law doesn’t start for another couple of months, but the next few days are crucial for hundreds of thousands of customers at risk of losing financial aid when they renew coverage for 2016.
Call them tardy tax filers: an estimated 1.8 million households that got subsidies for their premiums last year but failed to file a 2014 tax return as required by the law, or left out key IRS paperwork.
Because of coordination issues between the IRS and marketplaces like HealthCare.gov, consumers who keep procrastinating into the fall are taking chances with their financial aid, according to insurers and the tax agency. That means someone who’s been paying a monthly premium of $90 could suddenly get hit with a bill for $360.
Government officials say they have a backstop planned that should help many procrastinators. Nonetheless, insurers and advocacy groups say they’ve been told the best way returning customers can avoid hassles is to file their taxes correctly by Aug. 31.
“You don’t want to get to December and realize that your subsidy amount isn’t there,” said Clare Krusing, spokesman for the industry group America’s Health Insurance Plans. Sign-up season starts Nov. 1, and insurers typically send bills for January in mid-December.
The last thing insurers want is consumers blaming them. They’re particularly concerned satisfied customers just waiting for their coverage to automatically renew might get a nasty surprise.
Hoping to stave off problems that could get amplified in an election year, the IRS started notifying tardy filers in mid-July. The form letters spell out in bold type that filing an electronic tax return within 30 days “will greatly reduce the risk of an interruption” in health care subsidies.
Obama’s health care law created tax credits to help people afford private insurance.
Nationally that aid averages $272 a month, covering roughly three-fourths of the premium.
