Editor's note: Beginning with tax year 2014, all health insurance marketplaces—both federally facilitated and state-based—were required to report information about Qualified Health Plan (QHP) enrollment to all enrollees through Form 1095-A, which was developed by the Internal Revenue Service (IRS) and used by enrollees to fill out new tax forms. While some feared that the new challenges with generating, distributing and using the 1095-A form would evoke memories of the Affordable Care Act's (ACA's) difficult first open enrollment period, the state-based marketplaces (SBMs) and federally facilitated marketplace (FFM) primarily executed their reporting requirements to enrollees successfully. The IRS also helped to ensure this first tax season went smoothly by providing consumers flexibility in filing their tax returns, permitting consumers not to refile with late corrected forms, and encouraging consumers to request filing extensions.

Through the support of the Robert Wood Johnson Foundation's State Health Reform Assistance Network, Manatt Health facilitated a workgroup of SBMs leading up to and during the 2014 tax season to discuss implementation challenges and solutions. Based on those workgroups and follow-up interviews with marketplace officials in California, Colorado, the District of Columbia, Kentucky and New York, Manatt Health produced a new issue brief, summarized below, examining the practical strategies learned this year to ease implementation of the 1095-A forms in the future. Click here to download a free PDF of the full issue brief.

Ensuring Data Integrity and Reconciliation Between Carriers and States

The 1095-A forms are used in the process of claiming and reconciling the premium tax credit, making it critical that they accurately reflect enrollees' coverage status and tax credits received or owed. To ensure the integrity of the data provided on their forms, all marketplaces engaged in a data integrity reconciliation process with QHP carriers to verify that the data in their systems matched the data in the carriers' systems. Most marketplaces relied on carriers for this data because carriers collect enrollees' premiums and therefore are responsible for providing timely and accurate information to the marketplaces.

All states reported the need for an extensive data exchange and quality assurance process with carriers and have continued cleaning the 2014 data well into 2015, such that the two coverage years' data integrity efforts are now overlapping. Marketplace officials noted that the greatest discrepancy with carriers' data was due to not receiving an effectuation, termination or cancellation transaction from the carrier, leading the systems to show different coverage start and end dates or enrollment status. Since premium tax credits are based in part on the number of months for which someone is enrolled in a qualified health plan, the start and end dates of coverage can directly affect the size of someone's credit. Interviewees also acknowledged that this year's data was impacted by the technical challenges encountered as they and carriers launched the marketplaces for the first time.

States had the following recommendations regarding data integrity reconciliation:

  • Establish an ongoing, proactive strategy for checking data integrity. Conduct reconciliation with carriers:
    1. On an ongoing basis throughout the year;
    2. In an extensive effort well in advance of generating and distributing the forms; and
    3. Throughout the tax season after original 1095-A forms have been distributed.
  • Plan to continue reconciliation with carriers beyond the end of the tax season.
  • Prepare for insurance carriers to be occupied with their new reporting obligations under the ACA in tax year 2015. A number of marketplaces noted that carriers will be newly implementing Form 1095-B and may have more limited capacity to work with marketplaces on 1095-A forms.

Generating and Distributing Form 1095-A

Marketplaces were required to generate and distribute a high volume of 1095-A forms by the end of January 2015. All states highlighted the need to prepare early for such a large mailing, requiring that their cover letters be finalized well ahead of the mailing. Marketplace officials agreed, however, that the cover letter included was an important tool for ensuring consumers understood what the 1095-A form was and how to use it. Most marketplaces both mailed the form to a physical address and posted a PDF version online to an individual's account (or, in D.C.'s case, through a separate login).

Many states noted that a high volume of returned mail hampered their efforts to reach enrollees efficiently. California instituted a manual process to call consumers and request an updated mailing address.

States had the following recommendations regarding generating and distributing Form 1095-A:

  • Conduct extensive testing on the production of Form 1095-A, develop batch tests and reach out to contacts at the IRS, as needed.
  • Plan well in advance for a massive mailing effort, including finalizing cover letter language early and cleaning physical addresses on file—throughout the year and in advance of the mailing.
  • Institute a process as automated as possible for correcting addresses on returned mail and resending it to the updated addresses.
  • To reduce consumer requests for duplicate copies of Form 1095-A, provide access to forms through the mail and online. Consider leveraging existing resources to establish a secure portal for providing consumers with electronic copies of their forms.

Tackling Errors and the Correction Process

In the event an error was identified on a form already sent to an enrollee, marketplaces were required to issue a corrected 1095-A form. While marketplaces sent some corrected forms in response to errors identified by enrollees, more commonly, marketplaces sent corrected forms because they received updated enrollment information from carriers after the original 1095-A form had been sent to a recipient. Marketplaces also sometimes identified errors produced by their IT systems. The most common reasons a 1095-A form needed to be revised included:

  • Errors associated with start dates, termination dates, and number of months (or which months) the enrollee was covered. In particular, marketplaces noted that enrollees in a "grace period" for non-payment of their premiums required corrections to their termination dates due to their retroactive terminations.
  • Cancelled policies. Marketplaces noted that they were required to send "voided" 1095-A forms to some enrollees who, after receiving the original 1095-A form, claimed never to have been enrolled in coverage.
  • Incorrect advance premium tax credit (APTC) information.

Most states required people to submit a paper form or call the marketplace's call center to request a correction. Several marketplaces expressed interest in developing a more consumer-friendly process for requesting corrections in the future.

Most marketplaces relied on carriers to review and validate requested corrections. Generally, marketplaces worked in tandem with and relied heavily on carriers as part of the correction process. It therefore behooved states to delineate clear responsibilities regarding which entity's data would be used to address a consumer's requested correction and how to share information or documentation when needed.

States' recommendations regarding errors and the correction process include:

  • Begin planning for the correction process, as early as possible, considering staff and IT infrastructure required to accept corrections, verify information with carriers, approve corrections and produce a corrected form in as timely a manner as possible.
  • Build close relationships with carriers, and establish a defined hierarchy for marketplace and carrier data, as well as a clear process between the two entities to resolve discrepancies.
  • Permit enrollees to submit corrections through a variety of means, including online forms.
  • Set up a real-time system to document and analyze requests for corrections during the tax season, allowing the marketplace to identify trends in required corrections and any systemic errors that could inform future efforts to ensure data integrity.

Providing Consumer Assistance

Because 2014 was the first year of marketplace coverage, officials anticipated extensive consumer confusion for the first tax season and a high need for consumer education. Particularly problematic in early 2015 was the overlap between the end of the 2015 open enrollment period (which concluded on February 15, 2015), marketplaces' distribution of the 1095-A form (approximately the end of January) and a standard peak in the tax filing season when many people tend to submit their tax forms (mid-February). This confluence of factors created a period of uniquely high need for consumer assistance to address both open enrollment and tax filing questions simultaneously. For the upcoming tax season, the confusion will be reduced because the 2016 open enrollment period ends on January 31, 2016.

To account for the anticipated confusion, marketplaces prepared various types of consumer assistance, including sending a cover letter with consumer-friendly instructions, training navigators and assistors, engaging with the nation's tax preparers, and, in particular, relying heavily on their call centers. Most marketplaces trained a dedicated set of call center representatives and some set up a separate phone number specifically for 1095-A questions.

States recommended the following strategies to provider consumer assistance through call centers:

  • Train a dedicated unit within the call center to assist consumers with more complicated 1095-A questions, but educate all representatives so basic questions can be answered by any representative.
  • Increase staffing in anticipation of a high volume of calls, particularly as the 1095-A forms are distributed and at peak filing times. Despite the smaller overlap between the open enrollment period and tax filing, many officials projected increased confusion next year due to the addition of the 1095-B and 1095-C forms.
  • Track the volume of calls specific to 1095-A forms and review call logs to identify common sources of confusion or error. Use this information to update training materials and for communications with carriers.
  • Provide a simple, online "benchmark plan look-up tool" that enables enrollees who must fill in their benchmark plan information to access it easily.

In addition to utilizing their call centers, marketplaces adopted an affirmative approach to managing consumer questions and confusion about the 1095-A form, relying on a diverse mixture of strategies they credit with reducing the volume of 1095-A calls. States recommended the following key consumer assistance strategies:

  • Send "watch the mail" and "alert" notifications prior to distributing the form.
  • Develop "frequently asked questions" to help consumers through potential areas of confusion.
  • Dedicate a page online to 1095-As.
  • Conduct outreach to and training for the tax preparation community.

States also instituted a variety of other strategies to address consumers' questions:

  • Training all consumer assistors and stakeholders.
  • Including a cover letter with the 1095-A form, describing what the form was and how to use it.
  • Engaging on social media, such as posting updates and explanations on the marketplace's Facebook page.

Establishing Partnerships with Federal Agencies

In addition to providing 1095-A forms to enrollees, marketplaces were required to report enrollment information through monthly and annual data transfers, primarily to the IRS though secondarily to the Centers for Medicare and Medicaid Services (CMS). To prepare states for the reporting requirements and address any new issues, the IRS conducted biweekly workshops with SBMs. Interviewers reported the workshops were very informative and praised the IRS staff for their timely responses and flexibility in developing solutions to challenges. While states had much less need to interact with CMS, they also indicated CMS was available as necessary.

States identified the following areas where improvements could benefit their planning and processes:

  • Communicating changes in IRS policy that directly affect marketplace enrollees.
  • Providing clarity on outstanding areas of uncertainty, such as issues related to the SHOP marketplaces that the IRS had not yet addressed.
  • Aligning technical requirements across agencies, so states can efficiently prepare one transaction for both the IRS and CMS.
  • Providing greater accessibility to IRS notices and procedures, such as receiving updates from the IRS on planned correspondence with tax filers that might trigger calls to the marketplace call center.

States outlined the following requests and recommendations to strengthen their relationship with the IRS and/or CMS and to clarify outstanding questions:

  • For IRS and CMS:
    1. Provide timely, clear, written communication of changes in policy or processes during the tax season.
    2. Jointly update and provide in consolidated and written guidance all policy and technical requirements that were developed and communicated during the 2014 tax season.
    3. Align technical reporting requirements to enable efficient state data transfers.
  • For IRS:
    1. Provide marketplaces with copies of the consumer communications sent to 1095-A form recipients.
    2. Dedicate additional resources and possibly a phone line to consumers with 1095 forms and/or provide marketplace consumer assistance representatives.

Implications for Future Tax Seasons

The rollout of 1095-A was another "first-ever" challenge for marketplaces. In the process, they identified important lessons for assisting marketplaces in the future, as well as the issuers, state and federal agencies, employers and others now charged with issuing the new IRS forms needed to administer the individual shared responsibility requirement and the large employer responsibility requirement. For those newly charged with distributing ACA reporting forms, the key lessons applicable to all 1095 reporting include:

  • Prepare as early as possible, allowing significant time to test technology, data integrity and communications strategies, as well as to develop relationships with partners.
  • Adopt a proactive strategy to check and verify data well in advance of when the forms must be sent.
  • Anticipate the need for a corrections process, including identifying errors, alerting consumers, creating a mechanism for consumers to see corrections, resolving data disputes and educating consumers about how to respond if they receive a corrected form.
  • Prepare for consumers' calls and questions, including taking proactive steps to reduce questions by sending clear and specific cover letters, providing training to appropriate staff, and developing relationships with the tax preparation community.
  • Prepare for the IRS adopting policy changes, if critical to allow for a successful filing season.
  • Establish a "best practices" network or other forums for sharing strategies. (In the marketplace context, the Robert Wood Johnson Foundation's State Health Reform Assistance Network was one of the few sources for SBMs to share notes, training materials and other tools to ease the implementation of the 1095-A reporting process.)
  • Anticipate new challenges associated with consumers receiving multiple forms (such as if they are enrolled in Medicare and Medicaid or have switched from marketplace to Medicaid coverage over the year).
  • Understand the unique challenges and opportunities for Medicaid and Children's Health Insurance Program (CHIP) agencies.


While not without challenges, marketplaces were able to fulfill their obligation to provide consumers with the data needed to receive and reconcile premium tax credits for the first time in the 2014 tax season. They succeeded using a range of practical strategies that emphasized educating consumers, preparing technically, anticipating issues, developing contingency plans, and working collaboratively.