Special 2016 Federal Marketplace Enrollment Period for Individuals without Marketplace Insurance Due to Failure to File a 2014 Federal Return and Reconcile

The Center for Medicare and Medicaid Services (CMS) which runs the Federal Marketplace has announced that there will be a special enrollment period that will run from now until March 31, 2016. This special enrollment period is for individuals previously determined to have been ineligible for the Advance Premium Tax Credit (subsidy) in 2016 because they failed to file a 2014 federal return and did not complete the required reconciliation on Form 8962 (Premium Tax Credit).

The special enrollment period specifically applies to individuals who:

• Are not currently enrolled in 2016 coverage through the Federal Marketplace;
• Are not receiving an Advance Premium Tax Credit (APTC) because they failed to file a tax return for 2014 and reconcile their 2014 APTC; and
• Subsequently filed their 2014 federal tax return and reconciled their 2014 APTC on Form 8962.

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Taxpayers who received an advance premium tax credit (subsidy) in 2014 and have not filed a 2014 federal return

As of the end of July 2015, approximately 1 million of the 4.5 million taxpayers who received an advance premium tax credit (subsidy) to help pay for their 2014 health insurance premiums had not filed a 2014 federal return and completed the required reconciliation on Form 8962 (Premium Tax Credit).

The IRS has sent these taxpayers Letters 5591, 5591-A, or 5596. These letters explain the importance for the taxpayer to file their 2014 federal return with a completed Form 8962 (Premium Tax Credit) within 30 days of the date of the letter in order to avoid a possible delay in receiving their advance premium tax credit to help pay for their 2016 health insurance premiums.

The automatic renewal process for the Federal and State Marketplaces will take place in early October 2015 for 2016 health insurance coverage. Those who go through the automatic renewal process will not be officially enrolled until December 15, 2015. Individuals who have not filed their 2014 federal return by early September 2015 may experience delays in receiving their advance premium tax credit (subsidy) that helps pay for their 2016 health insurance premiums.

Under the Affordable Care Act, any taxpayer who receives a subsidy to help pay for their health insurance premiums must complete the reconciliation of advance premium tax credit with the actual premium tax credit or they will be denied a subsidy in the following year. This means they must file a federal return and complete Form 8962 (Premium Tax Credit) for each year they receive a subsidy even if they otherwise do not have a filing requirement.

The Marketplace must receive from the IRS a positive indicator that the individual had completed the reconciliation in order to receive a subsidy for the subsequent year. Since it takes time for the IRS to process a return and then make it available to the Marketplace, there is a high likelihood that the IRS will have sent a negative indicator for those tax returns that are filed in mid to late September and October. Therefore, taxpayers may have to go through additional steps to receive their advance premium tax credit for 2016.

For more information see the following:

• IRS Health Care Tax Tip 2015-40 (File Your Tax Return Now to Receive Timely Advance Payments in 2016)
• Reconcile Advance Premium Tax Credits section of the Affordable Care Act Tax Provisions for Individuals and Families page on the IRS website
• Affordable Care Act: What’s Trending page on the IRS website