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Unfiled taxes still threaten health insurance subsidies for many

Health Care and Health Insurance
by Cabe Chadick
Health insurance is one of the most  important employee benefits.
Health insurance is one of the most important employee benefits.

For some time now, the federal government, tax professionals, and those in the health insurance industry have been warning millions of Americans about a major potential risk they might face. Specifically, if those people don't get their 2014 tax filings sorted out very soon, they could lose out on the subsidies and other assistance that helps them afford coverage bought through state or federal exchanges.

At this point, there are still about 1.8 million American households that received health insurance subsidies from the federal government but are at risk of losing them for the 2016 open enrollment season, according to a report from NBC News. This is all related to their tax filing status for the documents due April 15 of this year; some didn't file them at all, while others might have made errors such as missing paperwork or filling out information incorrectly.

How big of an issue would this be?
Given how significant the benefits of these subsidies can be - worth thousands of dollars per year - it's certainly in the best interest of those who haven't yet clarified their tax situations to do so as soon as possible, the report said. They must do so within the next few days (before Aug. 31) to ensure there are no problems for the 2016 open enrollment season, which starts at the beginning of November.

Clare Krusing, spokeswoman for the industry group America's Health Insurance Plans, further noted that because many of these people might not even know about the issue, it could create real problems for them, the report said. Many might only find out during the open enrollment that their previous filings led them to miss out on the subsidies upon which they'd come to rely. And the fact that so many will likewise have to buy coverage or pay significant fines for going without could further complicate the issue for them.

People may need to do more to ensure they're filing all the right tax documents.People may need to do more to ensure they're filing all the right tax documents.

Why is the problem so significant?
One of the biggest reasons that so many people are falling behind in the first place, though, might have a lot to do with the changes the health care law implemented, the report said. For instance, many Americans who made less than a certain amount simply didn't have to file taxes in the past, but now they must do so if they want to receive the subsidies, even if their incomes haven't changed much or at all. As such, given that this is only the second year in which this requirement was put into place, there may still be plenty of confusion out there, particularly for people whose incomes fluctuate enough that they've traditionally gone back and forth between having to file and not having to do so from one year to the next.

This is certainly an issue that should be of concern to the health insurance industry as a whole, because without these subsidies millions of Americans might be forced to go without coverage. Therefore, any outreach they can do to help people understand their obligations under the new rules will be critical going forward.



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