By Peter Sullivan - 01/11/16 08:12 PM EST
About 43,000 ObamaCare enrollees are bearing the full cost of their insurance plans after losing the tax credits that are meant to make coverage more affordable.
Those enrollees no longer receive ObamaCare tax credits because they failed to file a tax return for 2014, according to the Department of Health and Human Services (HHS). The number has never before been released.
Losing the tax credit can come with a sticker shock. HHS said in March that the average monthly ObamaCare premium before tax credits was $364, compared to $101 after the tax credit.
The precise number of people who are losing federal subsidies is unclear, because even family plans are counted as a single applicant. The number also does not include the 12 states and the District of Columbia that operate their own insurance exchanges.
Still, the IRS warned in July that 710,000 households were at risk of losing ObamaCare subsidies because they hadn’t filed a tax return. After the warning letters went out, the number of households that hadn’t filed dropped.
In October, the IRS flagged about 172,000 ObamaCare applicants and notified them they were at risk.
HHS told The Hill that by Jan. 1, because some people fixed the problem and some people had dropped coverage altogether, “less than 25 percent” of the 172,000 applicants were enrolled in ObamaCare without tax credits. That translates to around 43,000 enrollees.
People who are enrolled in an insurance plan can become re-eligible for tax credits by filing their 2014 returns.
HHS said it anticipated the tax return problem and worked to prevent it, including with reminders on HealthCare.gov, the federal ObamaCare portal.
“This is an issue that we’re highly sensitive to,” Kevin Counihan, the CEO in charge of the federal marketplace, told reporters last week. “We’ve enhanced our application with new reminders, new pop-ups and other ways to try to assure people what they need to do to make sure that they comply and file the right forms.”
Other people who failed to follow an ObamaCare tax rule are getting something of a pass from the administration this year.
Those people filed their 2014 tax returns but failed to attach a form that compares their tax credits to their income to make sure they received the right amount of tax credit.
The IRS said Friday that about 976,000 households failed to attach the extra form, known as Form 8962, as of the end of October.
A Treasury representative said Monday that the administration is only cutting off tax credits to people who failed to file a tax return at all. The representative said the allowance for failing to file the second form is for this year only.
“We expect that taxpayers will continue to become acclimated to the changes in the tax filing process in future years,” the representative said. “We remain committed to providing information to taxpayers to help them understand and meet their responsibilities under the [Affordable Care Act].”
The IRS’s return process has undergone significant changes under ObamaCare, which linked health insurance and taxes in a way that people are unaccustomed to.
“There’s definitely a lot of learning to be done,” said Elizabeth Hagan, senior policy analyst at Families USA, a liberal healthcare advocacy group that supports ObamaCare. She noted that professional tax preparers “haven’t been used to filing these forms either.”
Republicans opposed to the healthcare law have long criticized it as overly complicated and say the confusion it has created shows the law is unworkable.
Some of the 12 states running their own marketplaces coordinated with the IRS to locate people at risk of losing their subsidies, to varying levels of success.
Connecticut’s marketplace said it found a way to warn people they could lose the ObamaCare credits without violating federal tax privacy rules. Other state-run marketplaces, however, said that they did not know how many people in the state had failed to file returns.
Still, the IRS sent notices to people in all 50 states, and there were several public awareness campaigns about the importance of filing a return.
Colorado’s marketplace said it would check its enrollees against IRS data after the sign-up period ends, on Jan. 31. At that point, anyone who failed to file a 2014 return will lose tax credits.
“We are concerned,” said Luke Clarke, a spokesman for the Colorado marketplace, adding, “The impact on the customer would be big.”
Hagan of Families USA said she hoped that the warnings broke through to people. But she said the notices for some people could have gone to the wrong addresses or email accounts.
“There’re always going to be people who fall through the cracks,” she said.