ObamaCare Subsidies Wrong for More Than One in Eight ObamaCare Beneficiaries
The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors…
So piles of unprocessed “proof” documents are sitting in a federal contractor’s Kentucky office, and the government continues to pay insurance subsidies that may be too generous or too meager. Administration officials do not yet know what proportion are overpayments or underpayments. Under current rules, people receiving unwarranted subsidies will be required to return the excess next year.
The problem means that potentially hundreds of thousands of people are receiving bigger subsidies than they deserve. They are part of a large group of Americans who listed incomes on their insurance applications that differ significantly — either too low or too high — from those on file with the Internal Revenue Service, documents show.
The government has identified these discrepancies but is stuck at the moment. Under federal rules, consumers are notified if there is a problem with their application and asked to upload or mail in pay stubs or other proof of their income. Only a fraction have done so, according to the documents. And, even when they have, the federal computer system at the heart of the insurance marketplace cannot match this proof with the application because that capability has yet to be built, according to the three individuals.
Source: Washington Post.
This is good news for people that are receiving a larger subsidy than they are supposed to. As for the government, there is no surprise here.
“We’re working every day,” she said, “to make sure individuals and families get the tax credits they deserve and that no one is receiving a tax credit they shouldn’t.”
Evidently they either aren’t working very hard or efficiently at it.
“…consumers are notified if there is a problem with their application and asked to upload or mail in pay stubs or other proof of their income. Only a fraction have done so, according to the documents.”
If they are receiving a larger subsidy than they are supposed to, what incentive is there to “fix the problem.”
If I was in their shoes, I would take full advantage of that opportunity for as long as I could.
“…have an application containing at least one kind of inconsistency. These inconsistencies have arisen as the information listed on their applications has been cross-checked,”
Inconsistency is the federal government’s middle name.
The inefficiencies are becoming more and more evident..
It’s a matter of degree. The way the subsidies are calculated virtually guarantees that the subsidies will be wrong nearly 100% of the time. It’s just that (we hope) 90% of the time the error will be small and not require an adjustment.
I don’t understand why people would want to high-ball their income because that means that they would likely receive a lower subsidy since they could afford more.
One possibility would be that after they have already submitted their forms they lost their job? So in essence, they may have had a lot of income when they filled out the form, they weren’t expecting to lose their job and suddenly earn no income by the time they were to receive their subsidy.
That is an interesting point, but I think that the article is talking specifically about people inputting their incomes incorrectly on purpose. So, no offense, but that argument doesn’t seem to be valid in this context.
Peter Suderman at Reason has covered this story, reporting that the contractor responsible for this function has a contract worth $1.2 billion for its piece of implementing ObamaCare. See http://tinyurl.com/lfvh9un.