Many unaware of required tax-time insurance reporting

The special health insurance enrollment period set up for people surprised by their tax penalties hasn't appeared to increase either awareness or enrollment by much, new research shows.

People who live in the 34 states that use HealthCare.gov and didn't know about the requirement to have health insurance can sign up through April 30 for 2015 coverage.

But nearly half of people planning to file taxes said they had heard nothing or very little about the requirement to report whether they have insurance on their tax return, according to new research funded by the Robert Wood Johnson Foundation..

"Very few people are reacting to the news by insuring," said Kathy Hempstead, who directs insurance coverage issues at RWJF.

"So far it doesn't seem we're seeing this mass teachable moment."

As of March 29, about 36,000 people enrolled in insurance through HealthCare.gov under the special enrollment period that started March 15. Hempstead called that a "tepid response," adding that she believes some people who are still uninsured "run the numbers in their head" and think it will be cheaper to pay the fine this year and continue getting health care however they are getting it now.

They may feel differently next year when the penalty increases from 1% of income or $95 per adult this year to 2% of income or $325 per adult, whichever is greater, she notes.

"With only one day remaining before the tax filing deadline, we continue to focus on increasing public awareness and providing the resources and assistance consumers may need," Aaron Albright, spokesman for the Centers for Medicare and Medicaid Services, said Tuesday. CMS is emailing reminders and tax tips, working with local non-profit organizations and tax preparers to assist consumers, he said.

April 15 looms large for other reasons relating to health insurance this year. When people signed up on the exchanges for 2014 coverage, they had to estimate what their 2014 income would be. Based on that, most got advanced premium tax credits that offset the cost of premiums. These were paid directly to insurance companies and consumers paid an adjusted premium.

That might cause people to forget they got this assistance. If the amount they estimated is lower than what they actually made, their refund will be lowered by the amount of the excess tax credit, or they might owe money if they aren't eligible for a refund. If the amount they estimated was higher, they will get additional money refunded or their balance due will be lower than otherwise expected.

The Kaiser Family Foundation estimates half of people eligible for health insurance subsidies would owe some money and 45% would receive a refund.

More than 800,000 of the tax forms sent to consumers to reconcile these estimates were erroneous, the Department of Health and Human Services announced in February. HHS says it sent corrected versions out to the "vast majority" of consumers who need them. Forms should be available on HealthCare.gov accounts, but consumers with questions can also contact the federal call center at 1-800-318-2596.

The Treasury Department granted another reprieve earlier this month when it said people who couldn't file an accurate tax return by April 15 because of problems with the health insurance tax form should file for an automatic extension by April 15. They will then have until Oct. 15 to file their return.

Treasury had already announced that anyone who enrolled in a plan on HealthCare.gov and filed their tax return based on one of these incorrect 1095 forms didn't have to file amended returns. IRS is not going try to collection any additional taxes from these people if they owe more money. Some people may still want to file amended returns, however, in they might be owed more money.

To be eligible for the special enrollment period ending April 30, taxpayers have to attest that they didn't know they were required to have health insurance or how the requirement would affect their family. They also have to owe the fee for not having coverage for one or more months last year and can't be enrolled already in 2015 coverage. Some of the state-based insurance exchanges are offering similar special enrollment periods, too.

Hempstead says enrollment is likely to rise more rapidly next year with the increasing tax penalties and inevitable health issues where uninsured people "won't be able to resist thinking 'if only I had gotten insurance this would be different.'"

"The cost of doing business as usual will continue to rise," she says.