As many as 1.8 million consumers nationwide are at risk of losing tax credits and paying more for coverage selected through the Health Insurance Marketplace.
In 2014, 4.5 million consumers nationwide claimed tax credits to reduce the cost of their health insurance purchased through the Marketplace. In Wisconsin, 166,142 individuals or 90 percent of those who enrolled received a tax credit. Those who used advanced payments of the tax credit to lower their monthly premiums were also required to file a federal tax return to verify their income. However, many consumers have not completed this step. Those who have not filed taxes could be disqualified from receiving tax credits for the upcoming year and be asked to pay back their tax credits for 2014.
In order to be eligible for the premium tax credit used to reduce the cost of health insurance coverage through the Marketplace, consumers are required to file taxes. A letter released by the IRS Commissioner cites that throughout the country, 710,000 consumers have not filed their taxes or requested an extension, 760,000 need to send in additional paperwork, and 360,000 filed an extension, but still need to complete their returns. There is not yet data available specific to the number of Wisconsin residents who are affected.
What Consumers Need to Know
If you had a Marketplace plan in 2014 and used advance payments of the premium tax credit to lower your monthly premiums, you must file a federal income tax return. If you haven’t filed yet, you should do it as soon as possible. If you haven’t filed a 2014 tax return, you may get a letter from the IRS.
- You must file even if you haven’t filed for an extension.
- You must file even if you usually don’t.
- If you don’t file a 2014 return, you may not be able to get a premium tax credit for a 2016 plan. You’d have to pay the full cost for a Marketplace health plan.
Consumers who have not filed their taxes or sent in the required forms need to do so as soon as possible or they may be ineligible to receive tax credits beginning January 1, 2016. Consumers interested in maintaining coverage would then be responsible for paying the full premiums for their health insurance. The average monthly premium (without any tax credits applied) in Wisconsin was $450 this year.
To avoid being uninsured or paying more for their coverage, consumers should file their 2014 taxes immediately. Consumers will need form 1095-A to file their taxes, which can be downloaded from their Marketplace account at www.healthcare.gov. Consumers who originally applied for coverage by phone should contact the Marketplace Call Center to request a copy of the form at 1-800-318-2596. When Form 1095-A is received, consumers should file their taxes either online or through a local tax preparer agency (find one here). Consumers with tax filing questions can contact the IRS or reference their website for more information.
- Wisconsin residents at risk for losing tax credits - August 10, 2015