Tax to hit health subsidy recipients

• If you got employer coverage part way through last year and were only in the insurance exchange for a few months, you will still need your 1095-A to account for the subsidies that you got.

• You can’t use Form 1040EZ if you received subsidized health insurance. You’ll have to file one of the longer forms instead.

— Associated Press

The administration said Monday it has started sending out tax reporting forms that they will need to complete their 2014 returns. Like W-2s for health care, they forms are for for people who got health insurance tax credits provided under the law.

Because this is the first time Americans will experience the complex connections between the health care law and taxes, there’s concern that some people may not realize the new forms are important, and that they do need to open that envelope. Some consumers may not know what to do with the paperwork.

Called 1095-A, the forms come filled out with information from HealthCare.gov or the taxpayer’s state insurance exchange. They list who in each household got subsidized coverage and how much the government paid each month to help with premiums.

The amount of the tax credit is based on a formula that takes into account income, household size, and local health insurance costs.

Those who got too much of a subsidy will see their tax refunds reduced by the IRS. For example, a taxpayer can get dinged for failing to report a change in income to HealthCare.gov or his or her state’s insurance exchange.

Those who received less of a subsidy than they were entitled to will get a refund.

The Health and Human Services department said it has started sending out forms to consumers in states where the federal government is running the insurance markets. The first batches should start arriving by midweek. The forms can also be downloaded from a taxpayer’s HealthCare.gov account.

States running their own insurance exchanges — including California and New York — will send out the forms separately. But they still must meet a Feb. 2 postmark deadline.

Insurers say the feds have told them that they expect to mail about 4.5 million forms and they’re tackling the massive job state by state.

Tax preparation companies are seeing a whole new line of business in the health care law. But insurers are worried that perplexed consumers will pepper them with tax questions they’re not qualified to answer. The health care law will mean lots more work for the IRS, and Commissioner John Koskinen is warning Congress that budget cuts could hamper taxpayer services this filing season.

The Obama administration has been trying to offer reassurance.

“In the coming weeks, HHS will work with other agencies, tax preparers and community organizations to arm … consumers with the information they need to know as they prepare to file their taxes,” Health and Human Services Secretary Sylvia M. Burwell said in a statement.