Thread: Obama Admin Making Billions In Obamacare Subsidy Payments Without Verifying Amounts

Obamacare subsidizing Big MED.
Obama Admin Making Billions In Obamacare Subsidy Payments Without Verifying Amounts

SARAH HURTUBISE
Reporter
1:42 PM 06/16/2015

The Obama administration is making billions in payments to health insurers under Obamacare without calculating the exact amount companies are owed, according to a federal audit released Tuesday.

Obamacare’s premium subsidies are paid each month directly to insurance companies, to ease the burden of health coverage to eligible customers in the health law’s government exchanges. The payments add up: the federal government doled out almost $2.8 billion to insurers in just the first four months of 2014, when Obamacare launched.

The agency tasked with making the payments hasn’t yet made sure the calculations behind the billions are accurate. An inspector general audit of the Centers for Medicare and Medicaid Services has found that the administration did not confirm the exact amount it owed each insurer before paying up, putting the billions in federal taxpayer funds at risk.

The problem lies in HealthCare.gov’s unfinished back-end system. The portions of the website which allow insurers to communicate enrollee information with the federal government hasn’t yet been completed and was even less workable in 2014, when the outlays began.

“Because CMS has not developed the systems to obtain enrollment and payment information on an enrollee-by-enrollee basis, CMS cannot verify the accuracy of the nearly $2.8 billion it authorized for financial assistance payments during our audit period,” the Health and Human Services inspector general report concluded. “Without effective internal controls…a significant amount of Federal funds are at risk.”

That means sensitive information about the customers who are receiving the subsidies wasn’t up to date before CMS began to make the payments. Insurers instead estimated claims to the federal government, without exact data on the number of exchange enrollees and whether those customers were up-to-date on paying their portion of the premiums themselves.

The administration has said that HealthCare.gov’s back-end system went through a reboot before the start of the second open enrollment period, but still isn’t complete. Federal officials don’t expect the system to be fully finished until the end of 2015, according to The Wall Street Journal, potentially putting taxpayer dollars at risk for two years of Obamacare’s operation.
The audit examined only the first four months of 2014. The Congressional Budget Office estimates that federal spending on Obamacare subsidies will reach $726 billion between 2015 and 2024.

Premium subsidies are paid in advance to insurers as a form of tax credit for customers. Even once insurers are able to submit current customer information to the federal government, the accuracy of each customer’s subsidy is only verified once individual enrollees file tax returns each April.

(RELATED: Obamacare ‘Clawback’ To Hit Some Subsidy Recipients With Huge Tax Bill)

CMS acting administrator Andy Slavitt said in a response to the audit that a series internal reviews was used to monitor accuracy and that the agency “takes the stewardship of tax dollars seriously.”

http://dailycaller.com/2015/06/16/obama-admin-making-billions-in-obamacare-subsidy-payments-without-verifying-amounts/

Tax Day Shocker: Obamacare ‘Clawback’ To Hit Some Subsidy Recipients With Huge Tax Bill

RPOLLOCK
Reporter
10:03 PM 02/08/2015

Anyone who receives Obamacare subsidies could be in for a rude awakening this tax season.
Four in ten low-income Obamacare participants will face sticker shock this April 15 when they discover they owe a great deal of money to the IRS because of a little-known “clawback” provision in the health-care law.
A family of four could owe the government as much as $11,200, according to a 2013 prediction by researchers at the University of California, Berkeley.
The idea that struggling, low-income Obamacare enrollees would have to repay the government for subsidies has been a dirty little secret that has always been part of the Affordable Care Act.
Although its existence has been known since 2010, neither Obamacare advocates nor the Internal Revenue Service have widely publicized it.
Authors of the groundbreaking UC study, written by supporters of the health-care law, warned the repayment feature could kill future support for Obamacare.
“Repayment requirements could lead to public dissatisfaction with the exchanges. And if there is much media attention to the need for repayments, some people could be dissuaded from participating in the exchanges,” they cautioned.
As tax time approaches, the word of forced repayment could fuel yet another round of public anger directed at Obamacare. This time, however, the anger could originate from Obamacare’s own beneficiaries.
Taxpayers should also be concerned, since estimates show the erroneous subsidy payments could cost the government up to $4.7 billion in 2014 alone.
And because the repayments are “capped,” the federal government will only be able to recover a small portion of the erroneously awarded subsidies.
Still, workers who receive income that’s 100 percent to 400 percent of the federal poverty line could face difficult repayments ranging from $600 to $2,500.
The California researchers admitted even a $2,500 repayment could be devastating to a couple.
“A repayment requirement of $2,500 could be a financial shock to a family of two earning $50,000 a year,” they stated.
Douglas Holtz-Eakin, the former director of the Congressional Budget Office, warned in an interview with TheDC that many Obamacare enrollees will be upset as April 15 approaches.
“There’s going to be a lot of dismay when they get to tax filing season,” he told TheDC in an interview.
Holtz-Eakin added it’s unlikely the government will recover or “recapture” all the wrongly-issued subsidies.
The administration “could simply say enforcing the recapture of too generous subsidies is too hard and effectively say, ‘we’re not going to get the money back.’ And the taxpayer loses,” he says.
The former CBO chief cited the federal government’s poor experience with a simpler, but comparable program called the Earned Income Tax Credit, under which as many as 25 percent of the filings were erroneous.
“This is a much more complicated system,” he said.
CBO estimates Obamacare subsidies to be $17 billion in 2014. A 25 percent error rate could cost the government $4.7 billion.
Tax experts say the problem began when the government originally asked Obamacare applicants who sought government subsidies to use two-year-old income data to establish their eligibility.
Obamacare policyholders in 2014 received subsidies based on their 2012 household income. Now they will have to reconcile the subsidies with their real 2014 earnings, which they report this year.
If they earned more income in 2014 than they originally stated in their 2012 tax returns, they will be ineligible for a portion or all of the subsidies.
Those Obamacare enrollees, consequently, will have to repay the money this year with their 2014 income tax return.
When Obamacare applicants originally were asked to report lower income, they might have initially welcomed it — a lower income offered applicants larger government subsidies, which in turn made their Obamacare insurance policies appear more affordable.
The subsidies were called “advanced premium tax credits” because they were paid directly to insurance companies to offset a policyholder’s premiums.
People were eligible for a subsidy if they earned between 100 percent and 400 percent of the federal poverty level.
Unmarried individuals earning between 100 percent to 400 percent of the federal poverty figure who misstated their income could be on the hook from $300 to $1250.
Families in the same poverty level ranges could face repayment of $600 to $2,500 to cover their unearned subsidies.
Fearful of a public backlash if repayments were high for struggling, low-income families, the Obama administration has “capped” the repayment to $1,250 for individuals and $2,500 for families — so long as their income is under 400 percent of the poverty line.
But if individuals or families earned more than 400 percent of the federal poverty line, they will be required to pay back the full amount of the subsidies, which were as high as $13,000.
The UC authors were keenly aware of the dangers surrounding the repayment policy, writing, “If subsidy repayments are high, the uncertainty could deter some families from taking up coverage in the Exchange, even with an individual mandate.”
The UC researchers calculated that “38.4 percent of individuals receiving subsidies would be in families that were predicted to owe repayments when they filed their taxes.”
They estimated some families could be forced this year to repay as much as $11,200.
In some instances, researchers predicted Obamacare recipients would poorly estimate their incomes by a wide margin.
“Thirty percent of recipients were in families whose income increased more than 20 percent, and 18.9 percent had income increases of more than 40 percent,” they reported from their analysis.
Kelly Fristoe, an independent health-care broker in Wichita Falls, Texas and owner of Financial Partners, said the idea of forced repayment with Obamacare subsidies “is going to leave a sour taste for a lot of people.”
Fristoe, who has been practicing for 22 years and has about 600 Obamacare clients, said that most applicants did not consider the consequences of even small household income increases when they filed.
He told TheDC in an interview that even a $500 income differential can amount to an $11,000 mistake.
“You can see a 63-year old couple making $62,000 a year and it produces about an $11,000 premium tax credit for that year. But if you put in $62,500, they get zero. So your extra $500 puts you in a situation where you lose out on getting an $11,000 worth of a premium tax credit. And if you claimed that tax credit, you now may have to pay it all back,” he said.
The California researchers found the same problem.
They said that “if a family of four with two working spouses over age fifty-five received a year-end bonus that put the family income just over 400 percent of poverty, the spouses could be required to repay as much as $11,200, or 12 percent of the family’s annual income.”
Holtz-Eakin told TheDC many Obamacare enrollees are about to get “whacked.”
“You’re an average American, just trying to play by the rules and then you get whacked at tax time,” he told TheDC. “That’s not going to sit well.”
Christopher Condeluci, a former Senate Finance Committee tax counsel, said that there are dangers when the government pays out money in advance.
“It’s very hard to be accurate on what the advance payment should be, which is arguably resulting in a lot of people paying back money and being surprised,” he told TheDC.
Stan Dorn, a senior fellow at the Urban Institute, said that repayment could be avoided if Obamacare recipients regularly updated household changes – like pay raises, new dependents, even bonuses – to the federal government.
“The most consequences would result if beneficiaries haven’t been making reports of changed household circumstances,” Dorn told TheDC in an interview.
He says that because this is the first year the Obamacare tax laws have been in place, no one knows the magnitude of the problem.
“We don’t know how many of those end up in the red, how many will lose some of the tax refund, how many will incur tax liabilities. We just don’t know,” he said.

http://dailycaller.com/2015/02/08/ta...huge-tax-bill/