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Obama Care News Updates

1.  A study conducted by the Government Accountability Office (GAO) of the Federal Government found that health insurance subsidies were successfully awarded to 11 out of 12 fake applicants the Office had submitted. The GAO study found that 11 applications, made by phone and online using fictitious identities, were awarded subsidized coverage, while one was denied. As of July 2014, the GAO continues to receive subsidized coverage for the 11 applications. The tests included fictitious applicants who provided invalid Social Security numbers, non-citizens claiming to be lawfully present in the United States, and applicants who did not provide Social Security numbers. The GAO also tried to test whether in-person assistors would encourage applicants to misstate their income in order to qualify for income-based subsidies.

According to the GAO, nationally, over 2.6-million application inconsistencies have been found for people who have selected health plans in the exchanges. The law requires the marketplace to provide eligibility while identified inconsistencies between information provided by the applicant and by government sources are being resolved through submission of supplementary documentation from the applicant. For its 11 approved applications, the GAO was directed to submit supporting documents, such as proof of income or citizenship; but, when doing so they found the document submission and review process to be inconsistent among these applications. Investigators provided fake documents, such as Social Security numbers and proof of income and citizenship, which proved to be no barrier to getting federally funded credits. Additionally, investigators found that federal contractors made no effort to authenticate documents applicants provided.

2. On July 22, 2014, two conflicting Appeals Court decisions regarding the Premium Tax Credit were released. The Washington D.C. Circuit stated that individuals using federal exchanges are not entitled to the credit while the Fourth Circuit Court of Appeals in Virginia said they are. These cases will be appealed. If the D.C. Circuit’s decision prevails, it could have far-reaching effects across the Affordable Care Act. For example, the individual mandate penalty for individuals who don’t have insurance is based on affordability. If the credit isn’t available, insurance becomes less affordable and fewer individuals could be subject to the penalty.

Meanwhile, the IRS announced that it has no plans to delay premium subsidies under the law following split decisions by two circuit courts of appeal. IRS Commissioner Koskinen indicated the subsidy issue will likely be decided by the U.S. Supreme Court. He said the Service does not plan to alter its implementation of the health care law while these cases work their way through the legal system.

3. According to the IRS, drafts of the forms for reporting employer shared-responsibility provisions are expected to be available for review soon. Generally, the employer mandate will be in effect after 2015. (Under transition relief, qualified employers with between 50 and 99 full-time employees are excused from share responsibility payments for 2015). The PPACA requires, among other things, that applicable large employers (ALEs) file annual information reports about their workers, minimum essential health coverage, and the number of employees who receive any Code Sec. 36B premium assistance tax credits.

The information required to be reported substantiates that an individual has minimum essential coverage through an eligible employer-sponsored plan. Employers must comply with the reporting rules to show compliance and be relieved from liability. Employers that are large enough to be subject to the employer responsibility provisions and who choose to “self-insure” will also need to complete the form for information reporting purposes only.

Posted in: Healthcare Reform, News

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