A prominent senator wants answers about lax oversight of more than 700,000 Obamacare recipients who received $2.4 billion in tax credits and who may owe the federal government money.
Sen. Orrin Hatch, R-Utah, on Monday demanded an investigation by a federal watchdog on Obamacare enrollees who received advanced tax credits but didn't file their taxes. Hatch held a hearing last week seeking answers on how 11 fake applications were able to re-enroll in Obamacare.
Now the object of Republicans' scorn is poor oversight of recipients of 2014 advanced premium tax credits.
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A person can get one of those tax credits as a way to pay down the cost of health insurance when he signs up for Obamacare one of two ways. The first is to get it as part of the refund, the second is an advance credit during enrollment.
All tax credits are based on income. To get an advanced credit, the enrollee gives his income level at the time he signs up.
However, that total can change by the end of the year when taxes are due. For instance, the enrollee could get a new, higher-paying job, a promotion or a big raise.
So when the enrollee files his taxes and makes more than previously disclosed, he has to pay back the difference in the tax credit.
But for that to work, the recipients of advance credits have to send in their tax forms.
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But 710,000 advance credit recipients haven't sent in their tax returns and did not request extensions to file by the October deadline, according to the Internal Revenue Service. The agency gave Hatch, chairman of the Senate Finance Committee, an update on the 2015 tax season on Friday.
Hatch was dismayed that so many people did not file their tax returns, and estimated that the recipients received more than $2.4 billion in credit payments.
"While it is likely that not all of these are fraudulent, because of the marketplace's lax integrity controls there is reason to believe that a significant portion are fraudulent," Hatch wrote in a letter to J. Russell George, the Treasury Department's Inspector General for Tax Administration, asking him to look into the issue.
This is the first year Obamacare has been a part of tax season, and Internal Revenue Service Director John Koskinen said the season generally ran smoothly.
Koskinen wrote to Hatch that the IRS will follow up with the taxpayers as appropriate. He said that if the taxpayers don't file their returns, they would be kicked out of the marketplaces in 2016.
The money from the tax credits goes to the insurance company instead of the taxpayer. However, it is still taxpayer money intended to pay down the cost of health insurance.
New findings such as the tax credit problem are providing new fodder for congressional investigations and hearings into the healthcare law.
The 11 fake Obamacare applications that were automatically re-enrolled in the 2015 marketplace, examined in last week's Senate Finance Committee hearing, were created as part of an undercover investigation being conducted by the Government Accountability Office.
While Republicans slammed the administration's handling during the hearing, Democrats said the agency's investigation is still ongoing.