Come October millions of people will be applying for tens of billions of dollars in federal health insurance premium subsidies on the gaji system.
On the Friday after the Fourth of July––when the administration apparently hoped no one would be paying attention––the Obama administration dropped 606 pages of regulations. Buried inside was the news that that insurance exchanges can ignore any personal income information they get from the Federal Data Hub during 2014 if it conflicts with "attestations" made by individuals.
That came three days after the administration announced it was putting the employer mandate on hold––and therefore not requiring detailed information from employers regarding the health plans they offer to their workers. The administration said the delay was because of the burden the reporting put on employers. But, was the administration ready to handle the data?
Because there will be no employer reporting in 2014, the administration also said in the Friday regs that the new health insurance exchanges "may accept the applicants attestation regarding enrollment in eligible employer-sponsored plan...without verification." Given the incredibly complex "ObamaCare" 60%/9.5% employer benefit eligibility rule, that will be a challenge for most citizens.
But here's the biggest deal in the new "ObamaCare" regulation: The exchanges are to rely upon the applicant's statement regarding their income the vast majority of the time. Instead of requiring proof of their income, as had been expected when the Federal Data Hub couldn't verify someone's representation, the exchanges will only do a formal check on a "statistically valid sample" of applications."
For those not part of this "statistically valid sample," "the Exchange may accept the attestation of projected annual household income without any further verification."
Apparently, millions of people will receive tens of billions of federal premium subsidy dollars "without any further verification."
It would appear that the administration is going to rely upon subsequent 2014 tax filings, made in early 2015, to reconcile what it paid people compared to what they were actually eligible for.
That presents some big issues.
First, tens of thousands of new "Navigators" will be helping people sign up for health insurance. I am sure the vast majority will be well meaning––but about all will be very inexperienced and likely most concerned about getting the maximum benefit they can get for their "clients."
I can imagine lots of ways the new system can be gamed to get at taxpayer money.
I can also imagine lots of innocent consumers getting their subsidy all bollixed up on the front-end (Do you know your likely “modified adjusted gross income” for 2014?) only to get hit with a whopper tax bill when they finally reconcile all of this on their 2014 tax return. For example, a family of four getting subsidies based upon 200% of the poverty level but ending up making 250% of the poverty level for the year, would see a retroactive liability of about $1,700 on their tax return because of subsidy overpayments.
That begs another question: What happens if subsidy recipients don't file a tax return––as millions of Americans now don't––for 2014?
Two of the essential things the Federal Data Hub was supposed to be able to do was to determine and report to the exchange if a person was eligible for a qualifying employer plan and to be able to feed an individual's income history to the exchanges to help determine the amount of subsidy they would be eligible for.
As of the week of the Fourth of July, it would appear the Federal Data Hub will be doing neither of these things––or at least not doing them to the extent they can be relied upon.
That begs yet another question: Is the Federal Data Hub not working as intended?
Now let's be clear. Any administration that tried to launch a refundable tax credit system was going to run into many of these kinds of challenges. George H.W. Bush proposed such a system, as did George W. Bush, and so did Presidential candidate John McCain––albeit nowhere near as complicated as "ObamaCare."
For me the big persoalan with this administration is how opaque they have been in trying to launch all of this instead of being forthcoming on what they––and the stakeholders who have to work with them––need to be ready to face. It also doesn't help that they waited until the day after the November election to really kick this process into high gear. Nor, does it help their cause to continually tell us there are no problems when everyone knows something is going on.
The top secret Obama administration's efforts to implement the Affordable Care Act took another strange and unhelpful twist this week with these announcements timed when they apparently hoped no one would notice––one immediately before the holiday and the other on the Friday after.
If I believed in conspiracies, I would really have to wonder about what was going on?
What's next?
*****
Kudos to Washington Post reporters Sarah Kliff and Sandhya Somashekhar for, as of Sunday evening, being the only reporters who had gone through the 606 page federal regulation the Obama administration dropped the Friday after the Fourth of July. It was their hard work that led them to report insurance subsidies and employer status will be based on the gaji system.
Apparently, the Obama administration was hoping no one would be willing to dive into over 600 pages of regulations on a holiday weekend.
The Obama administration came within two Washington Post reporters of being right.
*****
Earlier post:
Administration Delays the Employer Mandate––But What About Small Employers?
Sabtu, 20 Oktober 2018
People Who Haven't Filed A Tax Return To Get Unverified Health Insurance Exchange Subsidies
The head of the Centers for Medicare and Medicaid, Marilyn Tavenner, is out with a "Myths vs. Fact" clarification memo regarding the waiver of the employer mandate and whether the new health insurance exchanges will verify people's incomes when calculating subsidies.
I noted a couple of things in her memo.
Her memo indicates that the exchanges will request additional income information from a "random sampling" of people when, among other things, "an individual does not have a tax return on file and attests to an income significantly below current wage data."
Federal law required every individual, for example, with income above $9,750 to file a tax return for 2012. The health insurance exchanges are available to everyone making more than 100% of the poverty level ($11,500 for an individual) in states that have not taken the Medicaid expansion and 138% of the poverty level for those states that have.
So, given that the exchange threshold is above the threshold for filing a tax return, virtually every person eligible for a subsidy in the exchanges would have had to file a tax return prior to applying for benefits.
Tavenner makes it clear "the IRS will reconcile advance payments of the premium tax credit when consumers file their annual tax returns at the end of the year, and it will recoup overpayments and provide refunds when they occur."
That begs a question.
What happens if this person also doesn't file a tax return for 2014? Just how will the government recover any incorrect subsidy? Will the exchange keep a person who does not file a return on the exchange rolls in 2015? Will the exchange purge their rolls of anyone getting a subsidy that has not filed a tax return as of April 15, 2015?
Why should we expect people who haven't been filing a return to start now? It has been estimated that as many as 15 million people do not file a tax return.
Tavenner also asserted that:
What am I missing here? Of course they don't have to check if the information matches.
What everybody is trying to figure out is why the administration has suddenly said they aren't going to check the vast majority of applicants where the information doesn't match and the applicant can't explain it?
Tavenner said in her "Myth vs. Fact" memo that "there have been some mischaracterizations of these regulations," and "she suggested we needed to do a reality check on some of the myths that have been circulating."
I will suggest the most important thing the administration could do toward making people understand what's going on here is to tell us exactly why they aren't going to make an attempt to verify every applicant's representation that doesn't make sense.
And, since they are putting so much faith in the IRS correcting any subsidy problems later when people file their tax returns, they can also tell us what they are going to do about giving people benefits that don't have a history of filing tax returns.
Up until I read her "clarification" memo, I was actually more worried about people getting incorrect subsidies due to the poor verification policies and having a big tax surprise when they filed their returns. For example, a family of four getting a subsidy based upon earning 200% of poverty but actually earning income at 250% of poverty would have a $1,700 subsidy overpayment due the feds.
If they file a tax return.
I noted a couple of things in her memo.
Her memo indicates that the exchanges will request additional income information from a "random sampling" of people when, among other things, "an individual does not have a tax return on file and attests to an income significantly below current wage data."
Federal law required every individual, for example, with income above $9,750 to file a tax return for 2012. The health insurance exchanges are available to everyone making more than 100% of the poverty level ($11,500 for an individual) in states that have not taken the Medicaid expansion and 138% of the poverty level for those states that have.
So, given that the exchange threshold is above the threshold for filing a tax return, virtually every person eligible for a subsidy in the exchanges would have had to file a tax return prior to applying for benefits.
Tavenner makes it clear "the IRS will reconcile advance payments of the premium tax credit when consumers file their annual tax returns at the end of the year, and it will recoup overpayments and provide refunds when they occur."
That begs a question.
What happens if this person also doesn't file a tax return for 2014? Just how will the government recover any incorrect subsidy? Will the exchange keep a person who does not file a return on the exchange rolls in 2015? Will the exchange purge their rolls of anyone getting a subsidy that has not filed a tax return as of April 15, 2015?
Why should we expect people who haven't been filing a return to start now? It has been estimated that as many as 15 million people do not file a tax return.
Tavenner also asserted that:
"No matter which type of Marketplace is operating in a state, the Marketplace will always check the income information submitted by individuals against electronic income data sources such as tax filings, Social Security data, and current wage information. In most circumstances, we will request additional documentation from all affected individuals, such as when an individual does not have a tax return on file and attests to an income significantly below current wage data.So, if your submitted information matches the information on record, or you have a plausible explanation for why it doesn't, the government is happy but if your income representations don't match anything they have on record or you "cannot provide an acceptable explanation"––including those who don't have a tax return on file––they are only going to check that small statistically valid sample?
"We will request additional documentation from a random sampling of individuals only in the specific circumstance when:
- "Current income information is not available;
- "There is a significant discrepancy between the income reported on an available tax return and the income provided by the individual; and
- "The individual cannot provide an acceptable explanation for this discrepancy."
What am I missing here? Of course they don't have to check if the information matches.
What everybody is trying to figure out is why the administration has suddenly said they aren't going to check the vast majority of applicants where the information doesn't match and the applicant can't explain it?
Tavenner said in her "Myth vs. Fact" memo that "there have been some mischaracterizations of these regulations," and "she suggested we needed to do a reality check on some of the myths that have been circulating."
I will suggest the most important thing the administration could do toward making people understand what's going on here is to tell us exactly why they aren't going to make an attempt to verify every applicant's representation that doesn't make sense.
And, since they are putting so much faith in the IRS correcting any subsidy problems later when people file their tax returns, they can also tell us what they are going to do about giving people benefits that don't have a history of filing tax returns.
Up until I read her "clarification" memo, I was actually more worried about people getting incorrect subsidies due to the poor verification policies and having a big tax surprise when they filed their returns. For example, a family of four getting a subsidy based upon earning 200% of poverty but actually earning income at 250% of poverty would have a $1,700 subsidy overpayment due the feds.
If they file a tax return.