Taxpayers with health insurance could still pay extra

SAN FRANCISCO (KGO) -- By now, most people know that under the new Affordable Care Act, if you don't carry health insurance when you pay your taxes, you will have to pay a penalty.

But many don't know that even if you signed up for health insurance, you could still get hit with a higher tax bill than expected.

Rose Etheridge met with her H&R Block tax professional. She's been having the company do her taxes for five years but this year is different.

She signed up for healthcare through Covered California and now has a series of tax hoops to jump through.

"I really didn't understand the tax concerns with Obamacare. The only thing I understood was that there was a tax penalty if you didn't have the insurance," Etheridge said.

She is not alone. That's all that many people know.

Sue Ellen Smith heads up H&R Block's Bay View Office in San Francisco. She says this tax year with the Affordable Care Act is very different.

"It's a big, big thing. This is the biggest change in the tax code in over 20 years. It's huge," Smith said.

One tax issue began when Etheridge and others signed up for Covered California. They had to estimate their 2014 income.

Vanessa Muniz is a program director at Earn It! Keep It! Save It! and says if a participant's pay went up, they could owe more than their coverage and that is paid at tax time.

When asked if people knew about this, Muniz responded, "I don't think that is explained, unfortunately, when they apply for Covered California. I do not think it is fully explained, and it causes confusion."

There is another issue.

Over 100,000 Covered California participants received an incorrect Covered California tax form, called the 1095.

That makes filing a correct tax return impossible.

Dana Howard is with Covered California. "There was a miss-match of information that we had versus what the health plans had. That is being reconciled right now and then within the next couple of weeks, consumers who fall into that category, about 100,000 of them, will receive a new 1095 with corrected information on them that they can file their taxes," she said.

And that brings us back to Smith at H&R Block. She says if you already sent in your taxes and the forms were wrong, an amendment can be filed.

"This is the first year we have ever seen anything of this magnitude, where healthcare is intersected with taxes," Smith said.

The new forms will be sent out soon. If you are going to get one, you might have already received a letter notifying you of this.