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When Rogue Brokers Switch People’s ACA Policies, Tax Surprises Can Follow
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WHEN ROGUE BROKERS SWITCH PEOPLE’S ACA POLICIES, TAX SURPRISES CAN FOLLOW

By Julie Appleby April 15, 2024

Republish This Story


(LPETTET/iStock/Getty Images Plus)

Tax season is never fun. But some tax filers this year face an added
complication: Their returns are being rejected because they failed to provide
information about Affordable Care Act coverage they didn’t even know they had.

While the concern about unscrupulous brokers enrolling unsuspecting people in
ACA coverage has simmered for years, complaints have risen in recent months as
consumers discover their health insurance coverage isn’t what they thought it
was.

Now such unauthorized enrollments are also causing tax headaches. Returns are
getting rejected by the IRS and some people will have to pay more in taxes.

“It’s definitely gotten worse over the past year. We’ve helped three to four
dozen people this year already,” said Erin Kinard, director of systems and
intake for the Health and Economic Opportunity Program at Pisgah Legal Services
in North Carolina, which helps low-income families enroll in ACA plans and get
tax help.

Neither the IRS nor the Centers for Medicare & Medicaid Services, which oversees
the federal Obamacare marketplace, responded to questions about the problem.

The IRS did, however, issue an FAQ in February instructing consumers on what to
do if their electronically filed returns are rejected because of ACA issues.

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Unauthorized sign-ups can happen in several ways, Kinard and others said. Some
rogue agents troll online enrollment portals that are accessible only to brokers
but are integrated with the healthcare.gov website. When those agents open a new
policy or switch an already enrolled policyholder to a different plan, they
garner the associated monthly commissions. Other consumers unwittingly sign up
when they respond to advertisements touting gift cards or government subsidies
then are transferred to agents who enroll them in health coverage. It’s
happening even after new rules were put in place requiring agents to get written
or recorded consent from clients before making changes.

CMS has not released details on how many consumers have been affected or how
many agents have been sanctioned for participating in such schemes.

There’s also no public tally of how many taxpayers are facing problems as a
result. And the tax consequences can come as a surprise.

“Many people are finding out when they go to e-file their taxes and it bounces
back and the IRS says it can’t accept your return,” said Christine Speidel, an
associate professor and the director of the Federal Tax Clinic at Villanova
University’s Charles Widger School of Law.

Returns are rejected if the IRS has information indicating the taxpayer has ACA
coverage but the returns don’t include forms that help determine whether premium
tax credits paid on the policyholder’s behalf to insurers were correct. If their
income was misstated by the rogue broker who enrolled them, for example, they
might not have qualified for the full amount paid. Or, if they had affordable
employer coverage, they would not have been eligible for ACA subsidies at all.

Ashley Zukoski, an ultrasound technologist in Charlotte, North Carolina, had
employer coverage but now faces a tax bill for an ACA plan she said she never
signed up for. She reached out to KFF Health News after it reported on such
unauthorized plan enrollments.

Unbeknownst to her, she said, a broker in Florida enrolled her family in an ACA
plan in late February 2023, even though Zukoski had coverage starting that
January through her job. The broker listed an income that qualified the
household for a full subsidy, so Zukoski never received a premium bill.

Her first inkling that something was amiss came early in 2024 when she received
a special form, called a 1095-A, which showed she had an ACA plan. After
reporting the problem to the federal marketplace, she sought to get the 1095-A
voided so she would not be liable for the plan’s premium subsidies paid by the
government to the insurer.

But, because Zukoski’s pharmacy had billed the ACA plan instead of her job-based
coverage, her request was denied. She plans to appeal.

In the meantime, the family has filed an extension on their taxes.

“Instead of getting a $4,100 refund, we now owe almost $700 in taxes based on
the 1095-A and premium tax credit applied,” Zukoski said.

With the April 15 federal tax filing deadline upon us, there are some important
steps for affected consumers to take, tax and insurance experts said.

First, because it could take weeks to get corrected forms, experts recommend
filing for an extension to buy more time. When consumers file for that
extension, they should also pay any taxes owed to avoid penalties and interest.

In general, consumers who at any point in the year think they are victims of an
unauthorized enrollment or plan switch should report it immediately to the
relevant federal or state ACA marketplace and request a corrected Form 1095-A.
But move fast. Appeals to cancel coverage retroactively must be made within 60
days of discovering the fraudulent enrollment, Speidel said.

Consumers can ask for help filing a complaint with federal or state regulators
by contacting their own insurance agents or seeking help from assisters or
“navigator” programs, which are government-funded nonprofit groups that help
people enroll or deal with insurance problems.

Navigators and assisters are fielding many such cases this year and can submit
what are called “complex case forms,” which help federal officials investigate
such complaints, said Lynn Cowles, program manager for Prosper Health Coverage,
a navigator program in Texas.

Julie Appleby: jappleby@kff.org, @Julie_appleby


RELATED TOPICS

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 * Florida
 * North Carolina
 * Obamacare Plans

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WHEN ROGUE BROKERS SWITCH PEOPLE’S ACA POLICIES, TAX SURPRISES CAN FOLLOW

By Julie Appleby April 15, 2024

Article HTML <h1>When Rogue Brokers Switch People’s ACA Policies, Tax Surprises
Can Follow</h1> <span class="byline">Julie Appleby, KFF Health News</span>
<p>Tax season is never fun. But some tax filers this year face an added
complication: Their returns are being rejected because they failed to provide
information about Affordable Care Act coverage they didn’t even know they
had.</p> <p>While the concern about unscrupulous brokers enrolling unsuspecting
people in ACA coverage has simmered for years, <a
href="https://kffhealthnews.org/news/article/aca-unauthorized-obamacare-plan-switching-concern/">complaints
have risen</a> in recent months as consumers discover their health insurance
coverage isn’t what they thought it was.</p> <p>Now such unauthorized
enrollments are also causing tax headaches. Returns are getting rejected by the
IRS and some people will have to pay more in taxes.</p> <p>“It’s definitely
gotten worse over the past year. We’ve helped three to four dozen people this
year already,” said Erin Kinard, director of systems and intake for the Health
and Economic Opportunity Program at <a
href="https://www.pisgahlegal.org/free-legal-assistance/programs/#:~:text=WNC%20Health%20and%20Economic%20Opportunity,Credit%2C%20and%20Child%20Tax%20Credit.">Pisgah
Legal Services</a> in North Carolina, which helps low-income families enroll in
ACA plans and get tax help.</p> <p>Neither the IRS nor the Centers for Medicare
& Medicaid Services, which oversees the federal Obamacare marketplace, responded
to questions about the problem.</p> <p>The IRS did, however, <a
href="https://www.irs.gov/newsroom/how-to-correct-an-electronically-filed-return-rejected-for-a-missing-form-8962#:~:text=If%20you%20purchased%20insurance%20through%20the%20Federally%2Dfacilitated%20Marketplace%20%2C%20and,you%20should%20contact%20the%20Federally%2Dfacilitated%20Marketplace%20Call%20Center.">issue
an FAQ</a> in February instructing consumers on what to do if their
electronically filed returns are rejected because of ACA issues.</p>
<p>Unauthorized sign-ups can happen in several ways, Kinard and others said.
Some rogue agents troll online enrollment portals that are accessible only to
brokers but are integrated with the healthcare.gov website. When those agents
open a new policy or switch an already enrolled policyholder to a different
plan, they garner the associated monthly commissions. Other consumers
unwittingly sign up when they respond to advertisements touting gift cards or
government subsidies then are transferred to agents who enroll them in health
coverage. It’s happening even after new <a
href="https://www.cms.gov/files/document/2024-pn-ab-faq-9823.pdf">rules were put
in place</a> requiring agents to get written or recorded consent from clients
before making changes.</p> <p>CMS has not released details on how many consumers
have been affected or how many agents have been sanctioned for participating in
such schemes.</p> <p>There’s also no public tally of how many taxpayers are
facing problems as a result. And the tax consequences can come as a
surprise.</p> <p>“Many people are finding out when they go to e-file their taxes
and it bounces back and the IRS says it can’t accept your return,” said
Christine Speidel, an associate professor and the director of the <a
href="https://www1.villanova.edu/university/law/experience/clinics-externships/clinics/federal-tax.html">Federal
Tax Clinic</a> at Villanova University’s Charles Widger School of Law.</p>
<p>Returns are rejected if the IRS has information indicating the taxpayer has
ACA coverage but the returns don’t include forms that help determine whether <a
href="https://www.hrblock.com/tax-center/filing/credits/premium-tax-credit/">premium
tax credits</a> paid on the policyholder’s behalf to insurers were correct. If
their income was misstated by the rogue broker who enrolled them, for example,
they might not have qualified for the full amount paid. Or, if they had
affordable employer coverage, they would not have been eligible for ACA
subsidies at all.</p> <p>Ashley Zukoski, an ultrasound technologist in
Charlotte, North Carolina, had employer coverage but now faces a tax bill for an
ACA plan she said she never signed up for. She reached out to KFF Health News
after it reported on <a
href="https://kffhealthnews.org/news/article/aca-obamacare-plans-switched-without-enrollee-permission-investigation/">such
unauthorized plan enrollments</a>.</p> <p>Unbeknownst to her, she said, a broker
in Florida enrolled her family in an ACA plan in late February 2023, even though
Zukoski had coverage starting that January through her job. The broker listed an
income that qualified the household for a full subsidy, so Zukoski never
received a premium bill.</p> <p>Her first inkling that something was amiss came
early in 2024 when she received a special form, <a
href="https://www.irs.gov/forms-pubs/about-form-1095-a">called a 1095-A</a>,
which showed she had an ACA plan. After reporting the problem to the federal
marketplace, she sought to get the 1095-A voided so she would not be liable for
the plan’s premium subsidies paid by the government to the insurer.</p> <p>But,
because Zukoski’s pharmacy had billed the ACA plan instead of her job-based
coverage, her request was denied. She plans to appeal.</p> <p>In the meantime,
the family has filed an extension on their taxes.</p> <p>“Instead of getting a
$4,100 refund, we now owe almost $700 in taxes based on the 1095-A and premium
tax credit applied,” Zukoski said.</p> <p>With the April 15 federal tax filing
deadline upon us, there are some important steps for affected consumers to take,
tax and insurance experts said.</p> <p>First, because it could take weeks to get
corrected forms, experts recommend filing for an extension to buy more time.
When consumers file for that extension, they should also pay any taxes owed to
avoid penalties and interest.</p> <p>In general, consumers who at any point in
the year think they are victims of an unauthorized enrollment or plan switch
should report it immediately to the relevant federal or state ACA marketplace
and request a corrected Form 1095-A. But move fast. Appeals to cancel coverage
retroactively must be made within 60 days of discovering the fraudulent
enrollment, Speidel said.</p> <p>Consumers can ask for help filing a complaint
with federal or state regulators by contacting their own insurance agents or
seeking help from assisters or “navigator” programs, which are government-funded
nonprofit groups that help people enroll or deal with insurance problems.</p>
<p>Navigators and assisters are fielding many such cases this year and can
submit what are called “complex case forms,” which help federal officials
investigate such complaints, said Lynn Cowles, program manager for <a
href="https://foundcom.org/health-coverage/">Prosper Health Coverage</a>, a
navigator program in Texas.</p> Copy HTML

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