Column 82 Wrapping up 2014 and Getting IN for 2015.

Today we start the countdown!  Only 15 more days until the current deadline to enroll for individual health insurance coverage.  Should we start a betting pool to see if they actually hold to it?  Tax preparers are already lamenting the fact that they will be giving clients the bad news about tax penalties, but it will be after the time they can do anything about it.  Hmmm, time will tell.

Speaking of taxes, those who are enrolled for health insurance under the Exchange will be receiving a new form: 1095A. This is like a 1099 for insurance.  It states if you have had coverage that meets the minimum value standard as well as reflects any premium subsidy that was provided to you. It is not provided if you are enrolled in Medi-Cal or a Catastrophic level plan, according to the CoveredCA website.

In preparing your tax return for 2014 you will reconcile the estimated income you used to apply for coverage with actual income.  If your income is higher than estimated, you could owe more in taxes to repay the subsidy overpayment.  On the other hand, if your income was lower, then you could have a credit and get a refund. 


This reconciliation takes place on form 8964.  There are 15 pages of instructions for this form that attempt to cover most of the situations that might arise, including an option to use an "alternate calculation for year of marriage".  Apparently this is for a case if someone in your tax family had coverage under a qualified health plan for at least one month before your first full month of marriage.

If you have filed 1040EZ in the past, you will not be able to do so if you have a premium subsidy.

There are two other forms to be aware of:


IRS Form 1095-B: will be provided by Medicaid programs (Medi-Cal in California) but they are not required to provide to consumers for the 2014 calendar year


IRS Form 1095-C: will be provided by health insurance carriers or employers with sponsored health plans but they are not required to provide to consumers for the 2014 calendar year. If you receive this form, you are not required to use it for reconciliation this year.  To date, it is expected they will be required for the 2015 tax year.


In reviewing the forms, all I can say is that I am glad I am not a tax preparer this year.  Also, if you are using one, expect to pay additional to have this report completed.

As of this writing, I am not sure what will happen if you should have been in Medi-Cal, but actually were in a subsidized health plan.  I have written an inquiry to CoveredCA, but no reply to date. I have had some insureds who estimated higher income for 2014, then in October a Medi-Cal audit simply cancelled their insurance.  These were folks whose prior year's income would have put them in Medi-Cal and are self-employed so they have a difficult time estimating.    That has been maddening and difficult to fix.

We have noticed that some of our clients did not "auto-renew".  That has me quite concerned.  There is no process to let agents know.  We no longer get a notice of non-payment from the  insurance carriers, so we have to search our portals for late or no pays.  We are hopeful that we are catching them all before 2/15.  I encourage everyone who has not received a notice regarding their 2015 benefits renewal or premium bill to follow up by reviewing your Covered CA account on line or calling them at 800-300-1506.  You can call the insurance company directly as well.

If you apply for coverage now, your insurance will be effective 3/1/2015. Since the law allows up to 3 months without coverage, you will likely avoid any penalty for 2015.  I cannot say enough about getting your application in now.  I expect the website will start crashing at least by Feb 10th.


Finally CoveredCA has a new piece about using your health plan that might be helpful to anyone, not just Exchange enrollees.