More than 1 million people may be receiving incorrect subsidies under the Affordable Care Act. And for now, the government can’t do anything about it, according to The Washington Post.
The problem is yet another Healthcare.gov glitch. Only the consumer side of the website has had the problems that plagued its rollout fixed, so the government can’t electronically verify applicants who reported expected income that significantly differs from IRS records.
Just like taxpayers’ refunds usually depend on the way employers withhold money for payroll taxes, federal health care “premium tax credits” are also estimated. If enrollees find better jobs or get raises (or pay cuts) and subsidies aren’t adjusted, somebody has to foot the difference on April 15.
The Washington Post cites internal sources and documents that show 4 million discrepancies on the 5.5 million applications from people using Healthcare.gov. As many as 1.5 million of those are income-related. Consumers have received word and can send proof of their applications, but only 650,000 pieces of “proof” have been sent.
Piles of those “proof” documents, the Post reports, are sitting in a Kentucky contractor’s office. Important data sectors of Healthcare.gov remain faulty or unfinished, so verification must be done by hand. That will begin “sometime this summer,” the Post reports. For now, federal officials are mostly using current IRS records, and consumers may receive payments too small or too large for months to come. Post sources do not know what proportions are overpayments and underpayments.
If consumers have received too much in subsidies come April 15, 2015, the Heritage Foundation reports that those with incomes still under 400 percent of the poverty level have a cap on repayments. Depending on income and family size, a subsidy recipient might have to repay up to $300—or $2,500. But caps may not do much to alleviate the tax return sticker shock.
In fact, every enrollee could get a surprise next year. As expected, the risk pool has turned out to be older and less healthy, which doesn’t bode well for future premiums. Blue Cross Blue Shield of North Carolina is one of only two companies that sold plans in the Tarheel State. Blue Cross wanted 50 percent of enrollees to be younger than 34, but only 32 percent of the company’s 232,000 enrollees fall into that category. And those young enrollees had higher rates of depression, diabetes, chronic pain, and other health problems, than the group as a whole.
Overall, the Obama administration claims more than 8 million people have signed up under federal and state exchanges. That’s more than Republicans expected, but federal officials won’t say how many have paid premiums or how many were previously uninsured. The most recent data from McKinsey suggest about 1 million have not paid their first premiums yet. Insurance companies testifying before Congress May 7 also cited payment rates of 80-90 percent. Of paid enrollees, only about 22 percent, or 1.7 million, were previously uninsured.