Health insurance tax credits could be at risk for some Minnesotans

Some Minnesotans could be at risk of not getting federal tax credits next year to discount their health insurance costs because they've failed to file required paperwork with the IRS.

The national issue has captured the attention of some MNsure officials and prompted the state's health insurance exchange to notify enrollees and insurance advisers about the potential snag.

People who received advanced premium tax credits through MNsure in 2014, but have not filed required tax documents, will not be eligible for financial help through the exchange next year, MNsure said in background information supplied last week to health insurance counselors.

This summer, the IRS reported that thousands of subsidy recipients across the country had not filed two new documents with their taxes — a Form 1095-A that listed tax credits received and a Form 8962 for calculating how much subsidy an individual should have received based on actual income earned.

"If you have not filed a tax return, or filed a return without completing these new tax forms, your eligibility for future financial help may be in jeopardy," MNsure says in the fact sheet provided to counselors, which also will be posted Nov. 1 on the exchange's website (www.mnsure.org).

About 16,000 people in Minnesota obtained the tax credits during 2014. There are no estimates for how many people might not have completed paperwork, but MNsure thinks the figure is relatively low.

"The number of Minnesotans currently receiving [tax credits] is lower than most states, mostly because premiums in 2014 and 2015 were low," said spokesman Shane Delaney, in a statement. Plus, the tally of those earning tax credits in Minnesota is lower than elsewhere, Delaney said, because of coverage provided by the state's MinnesotaCare program.

Even so, MNsure board chairman Peter Benner circulated to board members earlier this month an article citing IRS figures that about 760,000 people who received subsidies as of July hadn't included the Form 8962 with their taxes. In addition, another 710,000 people across the country who received tax credits hadn't filed tax returns or sought an extension.

During the meeting in St. Paul, board members encouraged MNsure staff to highlight the issues with enrollees. MNsure did so, Delaney said, in renewal notices sent earlier this month to people who bought coverage through the exchange in 2015.

"Even though we think the population of people that will fall into this 'failure to reconcile' category is low, we want to make sure Minnesotans are aware of it," he said.

The Affordable Care Act created new health insurance marketplaces such as MNsure for people to buy individual health insurance policies. Tax credits provided to those buying through the exchanges are based on income estimates, and then subject to a reconciliation process at tax time.

For 2014, MNsure estimates about 16,100 people in Minnesota collectively received about $31 million in tax credits.

"If you have yet to file your taxes or forgot to attach your 8962, there is still time to file, but you should act now," the background document states. "If you do not file a tax return and reconcile the tax credit you received last year, you will lose the opportunity to receive a tax credit when you renew or apply for coverage for 2016."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck