The Obama administration says its special enrollment period to let those paying their first Obamacare tax sign-up for health care now is a one-time offer that won’t be repeated next year.
Penalty payers who missed the Feb. 15 deadline to get covered under the 2010 overhaul have until April 30 to sign up, a carve-out designed to minimize political and real-world damage as the nation confronts the confluence of health care and tax season for the first time.
“In subsequent years, this special enrollment period will not be available,” said Andy Slavitt, acting administrator at the Centers for Medicare and Medicaid Services.
The grace period kicked off Sunday and applies to customers in 37 states that rely on the federal HealthCare.gov portal, although several state-run exchanges offered similar relief.
People who still want to sign up must meet three conditions: They’re paying the “individual mandate” tax for lacking insurance in 2014, learned about the penalty after Obamacare enrollment closed Feb. 15 and have not already enrolled in coverage for the 2015 plan year.
This tax season is the first time filers have to address their health coverage status on their returns. While most will simply check a box, people who received tax credits to help them pay for coverage will have to reconcile the subsidies with their actual income.
People without insurance must pay a penalty to the IRS unless they seek a government exemption or take advantage of the special enrollment period.
The 2015 penalty for lacking insurance is $325 or 2 percent of household income above the filing threshold, whichever amount is greater – up from $95 or 1 percent of income in 2014.
People who take advantage of the grace period to avoid the 2015 fee will not be absolved of their 2014 penalty.
“It’s not retroactive,” Mr. Slavitt said.
Yet already, shady tax preparers or other scammers are trying to pocket the penalty money, according to the IRS.
The agency sent out a consumer alert Friday that advises filers to pay the penalty directly to the government along with their tax return, or in response to a letter from the IRS.
That’s because “unscrupulous preparers” are telling filers to make the payment directly to them. In some cases the payer has Medicaid or another type of coverage and doesn’t owe the penalty at all.
The IRS said it received several reports of the scam, which typically targets Spanish speakers with limited English proficiency.
Some preparers told filers to pay directly because of their immigration status, while others said a direct payment could reduce the amount of the tax.
Obamacare officials are prepping Americans for tax season changes while it faces serious challenges on multiple fronts.
Earlier this year, the administration said it sent erroneous tax forms to 800,000 people who received tax credits on the federal health exchange. The forms listed the wrong benchmark plan by which the tax credits are calculated, causing headaches for filers.
Officials deflected questions Friday about their progress in sending out corrected forms, saying they’re focused on the special enrollment period and will have more to say about the form, known as a 1095-As, in the coming days.
Meanwhile, the Supreme Court will decide by June if the administration is unlawfully paying Obamacare’s subsidies to customers in states that rely on the federal HealthCare.gov exchange.
The law says subsidies can be paid to customers on exchanges “established by the state,” which challengers interpret as the exchanges set up by only a handful of states.