On Monday, July 20, Orrin Hatch, Chairman of the Senate Finance Committee, called for an inspection of the Advanced Premium Tax Credit (APTC) program for 2014. The APTC is designed to forward tax credits as subsidies to individuals for health insurance on the exchange; with a reconciliation of these subsidies coming after year end when the individual files their tax return.
An inspection of this program found that over 710,000 recipients likely received over $2.4 Billion in advanced credit payments, and failed to submit tax returns or extensions of time to file after the deadline. The filing of a tax return is an important part of the program, as it ensures that individuals received the correct subsidy based on their income level, and pay any difference for subsidies received in advance.
In an undercover investigation, the federal exchange approved 11 out of the 12 fictitious applications it received over the phone and online. These undercover applications were submitted using falsified social security numbers or other fictitious information. The approval of these 11 applications cost the federal government (the taxpayer – you and I), $30,000 per year.
While many of the 710,000 recipients who did not file tax returns may have received warranted subsidies, the results of the undercover investigation performed by the Government Accountability Office (GAO) make me nervous about the accountability for government spending of our hard earned tax dollars.
Click here for a copy of the press release and more information on the findings of this investigation.
For questions on the Affordable Care Act (ACA) or any other tax related matters, contact Paul at paul@launchconsultinginc.com