Nearly three weeks after a Feb. 1 deadline, MNsure still hasn’t sent tax forms to tens of thousands of people who bought coverage through the state’s health insurance exchange last year.
MNsure plans to send more than 49,000 forms — called the 1095-A — this tax season, and a spokeswoman on Friday said about 40 percent have been mailed. That leaves about 29,000 to be distributed.
MNsure shoppers need the forms to file their taxes, so they can either claim tax credits for coverage they purchased last year or pay back excess subsidies. The IRS website lists the Feb. 1 deadline for sending the forms. “It’s delaying people from filing their tax returns,” said Chris Wittich, an accountant with Boyum & Barenscheer in Bloomington. “I could see why taxpayers would be upset.”
MNsure apparently isn’t the only government-run exchange that missed the IRS deadline. The federal government’s own HealthCare.gov exchange — which serves as the marketplace in most states — says on its website that users should watch for the tax forms in mid-February.
Even so, frustration has been apparent this week on social media, with several posts to MNsure’s Facebook page from people asking for their tax forms.
MNsure officials say they are trying to send all of the documents by the end of February. After delays with distributing forms last year, MNsure this year switched to an automated process that should improve the process in the long run, said Allison O’Toole, the MNsure chief executive, in comments to reporters following a board meeting on Wednesday in St. Paul.
“It’s the first year of an automated process … [and] that always brings challenges,” O’Toole said. “I think they’ll all be out by the end of February.”
O’Toole said the exchange hadn’t received any waiver from the deadline, but said federal officials “know our status.”
Launched in 2013 as part of the federal Affordable Care Act, MNsure is the only place Minnesota residents can receive tax credits that reduce the monthly cost of private health insurance policies.
When applying for coverage through MNsure, shoppers report their estimated income for the year, and they can receive tax credits in advance that are applied directly against the cost of coverage. At tax time, those shoppers go through a reconciliation process that means some might obtain a bigger tax credit, while others must pay money back, depending on their actual income.
In addition, people who qualify for tax credits through MNsure can elect to defer the benefit until tax time, in which case they would be claiming the full benefit when filing. It’s in a circumstance like that where taxpayers might want to file their returns as quickly as possible.
In general, lower-income filers have a better shot at tax credits, Wittich said, and therefore they try to file early to quickly tap refunds. This year, taxes are due on April 18.
“Some other clients that might be higher-income and owe money, they’re not the ones filing, generally, in February,” he said. “It’s the lower-income people getting their refunds [who] are trying to file, but they can’t.”
MNsure didn’t get all tax forms distributed by Feb. 1 last year, either. The exchange delayed sending many forms in order to make sure they were accurate.
In the end, the error rate on those forms was less than 3 percent. MNsure officials say the performance was far superior to HealthCare.gov, which in February 2015 announced that about 20 percent of filers who got tax credits through the website — roughly 800,000 people — would be receiving corrected forms.
One reader contacted the Star Tribune on Friday to say he’d received his 1095-A form from MNsure, but questioned its accuracy. Peg Hersch, a MNsure spokesman, said the exchange has a process in place for making corrections, if they’re needed, as well as staff members to help people with questions.
“We were successful last year in demonstrating a much lower correction rate than” the federal exchange, Hersch said in a statement Friday. “That remains a priority for us again this year.”
The Affordable Care Act intersects with tax season in other ways this year. Insurers and employers in Minnesota are in the process of distributing more than 1 million forms 1095-B and 1095-C, which provide proof that tax filers had coverage in 2015. Those forms, which are new this year and due to be sent by March 31, are part of how the IRS will check to make sure that individuals comply with the health law’s coverage mandates.
The IRS also will use the information to check to see if large employers are providing coverage as stipulated in the federal law. Any financial penalties on large employers, however, would be triggered if their workers obtain a tax credit for coverage through an exchange like MNsure — not simply based on the data supplied on forms, which also goes to the IRS.