On March 4, 2015, the Supreme Court will hear oral arguments in King v. Burwell. The key issue in this case is how the government may provide subsidies to people buying health insurance through government exchanges created by the Affordable Care Act, or ObamaCare. This case could also determine whether millions of Americans are free from the law’s onerous mandates and fines.
There are effectively two categories of exchanges: those “Established by a State” (described in Section 1311 of the law’s text) and the federal exchange (described in Section 1321). The statute authorizes the federal government to provide subsidies to enrollees in the state-established exchanges, but not the federal exchange.
When it became clear that many states — today as many as 37 — would not establish their own exchanges, the IRS issued a rule in 2012 allowing those who purchase insurance through the federal exchange to also receive subsidies. Plaintiffs in King v. Burwell claim the IRS acted illegally and did not have authority to do this.
Ultimately, it is up to the Court to declare that the Administration must uphold the law as written by Congress, not to refashion the law. A ruling in favor of petitioners in King could free millions of people from the law’s most onerous provisions, and could present a great opportunity to move past ObamaCare’s political stalemate and to seek a better path forward for healthcare policy.
The Department of Health and Human Services is prescribing an extra dose of two of ObamaCare’s most bitter medicines for 2016.
The maximum deductible will rise to $6,850, up 3.8% from this year’s $6,600 ceiling and about 8% above 2014’s $6,350 limit.
Meanwhile, the penalty for employers that don’t offer coverage to most full-timers will rise a like amount to $2,160 per employee, up from this year’s $2,080 fine. The original $2,000 fine never applied, because it was bumped up a notch after a year’s delay.
The majority (52 percent) of Obamacare enrollees receiving an advance premium tax credit to purchase Obamacare insurance is facing the prospect of paying back $530 of that tax credit to the IRS, according to a new study from H&R Block. This clawback is reducing the refunds for these taxpayers by 17 percent this filing season.
Under Obamacare, taxpayers earning between 133 and 400 percent of the federal poverty level are eligible to receive a tax credit to help purchase insurance on Obamacare exchanges. This tax credit is calculated using old tax data of the recipients. The credit is advanced ahead of time to the taxpayer’s insurance company. The taxpayer must reconcile at tax time the advance credit received with the actual credit she is eligible for.
The Obama administration revealed Friday that it sent about 800,000 HealthCare.gov customers a tax form containing the wrong information, and asked them to hold off on filing their 2014 taxes.
The self-inflicted bungle follows weeks of administration officials touting a successful enrollment season — one that saw far fewer technical glitches than the rocky launch in late 2013.
About 11.4 million people signed up this season. But the errors in tax information mean that nearly 1 million people may have to wait longer to get their tax refunds this year.
DANVILLE (KPIX 5) – Tens of thousands of people who buy their health insurance through Covered California will get an unpleasant surprise when they file taxes this year.
Stacy Scoggins gets plenty of mail from Covered California, but the one tax form the agency was required to send her by February 2nd still hasn’t arrived.
“After being on hold for 59 minutes, they told me that the 1095-A was never generated,” Scoggins told KPIX 5 ConsumerWatch.
She’s talking about the 1095-A form, a document required for enrollees to file their tax returns. It’s a problem, for the recent widow who desperately needs to file now.
If you’re among the roughly 20 million people affected by the Affordable Care Act — either because you bought insurance through health exchanges or will be subject to penalties or exemptions for failing to get coverage — filing a tax return just got a lot harder. Indeed, potentially millions of people who never before had to file tax returns will now need to file as the result of the health law.
The ACA, better known as Obamacare, has put health insurance in reach for millions of Americans by setting up subsidies for those who otherwise couldn’t afford to buy coverage. However, the subsidies that may appear to simply lower the cost of insurance premiums are actually “advance premium tax credits” that are paid directly to health insurers.
Janice Riddle got a nasty surprise when she filled out her tax return this year.
The Los Angeles resident had applied for Obamacare in late 2013, when she was unemployed. She qualified for a hefty subsidy of $470 a month, leaving her with a monthly premium of $1 for the cheapest plan available.
Riddle landed a job in early 2014 at a life insurance agency, but since her new employer didn’t offer health benefits, she kept her Obamacare plan. However, she didn’t update her income with the California exchange, which she acknowledges was her mistake.
Approaching ObamaCare With Humility
Washington can’t get out of Its own way on health care. Give states a chance.
President Obama spoke frequently of humility during last week’s prayer breakfast. Congressional Republicans could use a healthy measure of that virtue should the Supreme Court rule that ObamaCare subsidies are not available in the 37 states with federally-facilitated exchanges.
ObamaCare is the product of a yawning humility deficit. Its core conceit is that a group of very smart and ideologically like-minded people could reorganize the financing of a $3 trillion industry that touches the lives of 320 million Americans.
Its architects boast that more people have “selected a plan” this time around than during the program’s disastrous initial open season. They are quick to overlook the law’s wreckage – canceled policies, loss of employer-sponsored coverage, erroneous subsidies that will require people of modest means to repay the government with interest, and assorted other disruptions and deformations.
A law that is minutely prescriptive too often got its prescriptions horribly wrong. Its flaws will reach the point of absurdity should the Supreme Court rule that its attempt to subsidize health insurance made most health insurance subsidies illegal.
The case of King v. Burwell would be a simple one, but for its social and political implications. The Court is examining a defect in the law, one of many in what is perhaps the most poorly drafted statute in U.S. history. The provision in question provides that subsidized health insurance coverage is available only through an exchange “established by the state.”
The IRS effectively rewrote the law to allow subsidies to be paid as well through the 37 exchanges that were not “established by the state,” but by the federal government. In defending the agency, the Justice Department in essence argues that the IRS can change laws so that they conform to what Congress must surely have meant to write, rather than what they actually wrote.
The Court should instead base its ruling on the bedrock principle that only Congress has constitutional warrant to correct its own legislative blunders. If it does, health insurance subsidies will no longer be available to millions of people who live in states with federal exchanges, presenting 37 Governors with a stark choice between two unpalatable options: submit to ObamaCare’s flawed framework by establishing state exchanges or let their constituents forfeit subsidized coverage.
Democrats will pressure Governors to establish such exchanges while also pushing Congressional legislation to authorize the provision of subsidies through federal exchanges. Republicans are floating alternative proposals that would subsidize coverage for low-income people and those with pre-existing conditions, while stripping ObamaCare of mandates and relaxing some of its other requirements.
These proposals will meet with criticism, some of it justified. Getting the right subsidy in the right amount to the right person (or the right insurance company) on a monthly basis is tricky business. The Administration had 3-1/2 years from the law’s enactment to the launch of the exchanges to get it right. They didn’t. Erecting an alternative federally administered system in a matter of months would risk a similar fate.
Perhaps what is needed is not an alternative national system at all. ObamaCare’s serial pratfalls have led millions to question the federal government’s capacity to administer the law. A judicial smackdown five years after the law’s enactment will reinforce the view that Washington can’t get out of its own way on health care.
Republicans should embrace this sentiment and argue that health care is too important to be entrusted to the people who brought us ObamaCare. They should advocate that Governors be empowered to advance alternative ways of expanding coverage, springing them from ObamaCare’s take-it-or-leave-it trap.
Congressional Republicans could accomplish this by advancing a bill to provide capitated allotments to states that would be based on the amount of refundable tax credits that its residents received during 2014. To qualify for an allotment, a state would be required to develop a plan for providing affordable coverage to low-income residents and those with pre-existing conditions. Each state would decide how best to achieve these objectives, with the results subject to rigorous evaluation.
States that already have set up exchanges could keep them and those that have not could still establish them. But they also could instead choose to be freed from ObamaCare’s one-size-fits-all rigidities by opting to receive allotments. These allotments would provide the resources to launch innovative and effective alternatives to ObamaCare tailored to their state’s unique characteristics. If some states institute defective regimes, the damage would at least be quarantined and not induce national contagion.
Resisting the temptation to develop comprehensive national legislation will prove no easier for Republicans than it has been for Democrats. But if ObamaCare has taught us anything, it is that the good intentions behind sweeping legislation are often overcome by unintended consequences. The humility that might engender perhaps will make them think twice about devising a national regime of health insurance subsidies and instead give each state the opportunity to fashion programs best suited to their circumstances.
Millions of Americans who received subsidized health insurance under ObamaCare will find a new wave of frustration this tax season.
After losing their health insurance because it was not ObamaCare compliant…after slogging through the healthcare.gov website to get enrolled in a new policy…after losing their doctors…after learning that they must pay thousands of dollars in deductibles before they can get medical care…now they must face the IRS.
By the end of the month, they should receive a form 1095-A that shows they had health insurance through federal or state exchanges. They will use the form to fill out an astonishingly complex Form 8962 to reconcile the subsidies they received with the income they earned in 2014.
If they received too much, they will have to pay back some or all of the subsidy. That could mean they receive a smaller – or no – tax refund. And for the privilege of this new interaction with the IRS, many will have to pay hundreds of dollars to hire a tax preparer to help them wade through these new ObamaCare tax forms.
Yes, ObamaCare is getting worse.
H&R Block HRB 0% estimates that up to half of Americans who received subsidies for health insurance under the ACA last year will owe the IRS money.
An estimated 87% of those who signed up for health insurance on the new exchanges got subsidies to reduce their health insurance premiums and sometimes their cost-sharing expenses. An assistant professor of health policy at Vanderbilt University, John Graves, calculates the average subsidy was $208 too high.
But these taxpayers face yet another cost. Many of them are accustomed to filing the simple 1040EZ tax form. No more. Most will have to retain tax preparers to help them fill out the new Form 8962. That could cost them several hundred dollars.
The form is used for taxpayers to prove that they and everyone in their family (including children) had health insurance every month of last year, what their incomes were, how much of a subsidy they received, whether they are married, single, legally separated, etc. The examples in the instructions are a window into the complexity of family arrangements in America and, still, people surely will come up with hundreds more permutations.
The instructions are mindboggling in their complexity. They take up 15 pages of fine print and will challenge the most seasoned tax preparer. A one-sentence example: “Column B. Enter on lines 12 through 23, column B, the amount of the monthly premium for the applicable SLCSP [second lowest cost silver plan] reported on Form 1095-A, lines 21 through 32, column B.”
It continues, “If during 2014, your coverage family changes and you did not notify the Marketplace, or no APTC [Advance payments of the premium tax credit] was paid, the premium for the applicable SLCSP reported on your form(s) 1095-A may not be accurate…” It then provides a handy link to another IRS document to explain what you should do if that happens. The instructions go on and on like that for 15 pages.
If taxpayers have to pay back some or all of the subsidy, the instructions explain a new layer of complexity: People who make less than 200% of poverty, or about $23,000 for an individual, will owe only $300, even if they received thousands of dollars more in subsidies. If you make up to the 400% of poverty, or $46,000, you could owe $1,250. If you earned $46,500, which is just over the limit to qualify for subsidies, you will have to pay it all back – likely several thousand dollars.
And if you didn’t have health insurance last year, you will have to pay a fine of $95 or 1% of your modified adjusted gross income. A couple making $65,000 would have to pay a fine of about $450, for example. The “tax penalties” increase this year and next.
Can it get any worse? Yes.
Nina Olson, an IRS watchdog, estimates that 47% of those calling the IRS for help in filling out their tax returns won’t get their calls answered during tax filing season. Those who do get through will wait an average of 34 minutes to talk to someone, she estimates.
Tax preparers calling the “priority service line” will have to wait an estimated 52 minutes to talk to an IRS expert. IRS Commissioner John Koskinen admitted, “We do as well as we can. And ‘as well as we can’ is still going to be miserable.”
The vast majority of Americans who did not receive ObamaCare subsidies for health insurance will simply have to check a box on their regular tax form attesting that they had health insurance. Employers and health insurance companies will be sending them a form 1095-B or 1095-C, which they will attach to their taxes as proof of coverage.
The individual mandate is one of the most detested provisions in the health law, and the first tax season when people must comply will create a new level of outrage about the law, its intrusiveness, and the hidden costs in fines and hidden taxes that millions of Americans will face.