On Sept. 15, the Centers for Medicare & Medicaid Studies announced that it would be investigating income discrepancies for more than 360,000 Americans currently enrolled in a private health insurance plan through the federal health insurance exchange. The government organization that administers the Medicare and Medicaid programs reported that income levels differ from official tax records.
The CMS needs to verify that people who receive government subsidies actually qualify for this incentive. Individuals who currently receive subsidies to pay for health insurance must verify their income by Sept. 30 in order to continue using the subsidies.
A Serious Oversight
A top official from the Centers for Medicare & Medicaid Services confirmed that the tax records of certain individuals do not match the income information on file with the CMS. In addition to administering Medicare and Medicaid, the CMS is responsible for overseeing the health insurance exchange sites. Government officials will attempt to contact approximately 279,000 households over the next two weeks in an effort to verify enrollees’ income information.
What happens if enrollees fail to provide updated income information to the CMS? According to one of the organization’s high-level executives, people who take advantage of federal subsidies to lower the cost of their monthly health insurance premiums may see a reduction or total loss of these beneficial tax credits. This change would take place as early as October 2014. Additionally, people who have been granted more subsidies than they should have received based on income levels would have to pay back excess funds to the government.
The Impact of Subsidies
Despite the high number of discrepancies, the CMS is willing to give citizens the benefit of the doubt when it comes to income information. The agency suggests that official tax records may be outdated and that people may have unknowingly submitted accurate data that simply doesn’t match the records on file with the federal government.
At the end of May 2014, the Centers for Medicare & Medicaid Services discovered that income records didn’t quite add up for more than a million households. Since then, the agency has successfully resolved income discrepancies of more than 460,000 households but continues to work on 430,000 unresolved cases. How do these numbers stack up against the total number of enrollees? During the six-month open enrollment period in 2014, more than eight million people signed up for health insurance on the marketplace. Of these enrollees, about 85 percent accepted subsidies to help pay their premiums. Subsidies play a huge role in helping millions of Americans gain access to health insurance.
Other Reporting Issues
Along with the aforementioned income discrepancies, the Centers for Medicare & Medicaid Studies also reported that more than 100,000 beneficiaries have not provided adequate citizenship or immigration information. In August, federal authorities attempted to verify the citizenship status of these beneficiaries and offered an initial deadline of Sept. 5 to submit accurate information. The remaining enrollees who have not submitted appropriate documentation face losing their health insurance at the end of September. Those who choose to submit the right information can re-enroll once they comply with the law.
Reporting Income Discrepancies
All of these numbers add up to one important fact: People need to be careful about what they submit when signing up for health care coverage on the health insurance exchange. Income information is easily verifiable with a few brief searches in a government database; however, the government doesn’t always have access to recent updates such as pay increases, bonuses and other employment situations that might lead to an income discrepancy. Subsidies are based on income, and a person’s income might change as often as two or three times during a standard calendar year due to company policy. People who take advantage of subsidies need to make sure that they submit the right information up front to avoid problems in the future.
Enrollment for 2015
Open enrollment on the health insurance exchange sites begins Nov. 15 and lasts until Feb. 15 of next year. During this three-month period, people are encouraged to double-check their income information before signing up for a health insurance plan. Gathering recent tax statements, current pay stubs and any additional income information helps the government gain a more accurate picture of someone’s actual income versus just the base salary.
What happens if people fail to comply with the law regarding income verification? There are several heavy consequences for reporting inaccurate income information to the federal government. Depending on the nature of the situation, people could face fines, loss of health insurance and even criminal prosecution if the fraud is deliberate. For the most part, the issue may be one of misunderstanding. That’s why it’s important for people to submit accurate information to the government when applying for health insurance and subsidies. Not only will accurate reporting help individuals receive appropriate benefits, but it will also ensure that low-income families who need subsidies can take advantage of this program.