Congress is planning a hearing next week on the integrity of the Affordable Care Act’s Premium Tax Credit program as the Internal Revenue Service is cautioning taxpayers to make sure they are receiving the appropriate level of tax credits to help them pay for health insurance.
House Ways and Means Oversight Subcommittee chairman Charles Boustany, Jr., R-La., said his subcommittee would hold a hearing next Wednesday on the integrity of the administration of the Premium Tax Credit.
The Affordable Care Act created tax credits and cost-sharing subsidies for certain individuals purchasing health insurance through insurance exchanges. To ensure that payments only benefit those eligible and are made in the correct amount, the federal government must verify a number of pieces of information, including, identity of the applicant, date of birth, Social Security Number, income, lawful presence in the country, and other data. The hearing will explore the integrity of the premium tax credit verification system, and whether it is vulnerable to fraud, waste and abuse.
An official from the Government Accountability Office will be the only witness at the hearing, so a GAO report is likely to be issued that day.
“In recent years this subcommittee has examined fraud, waste, and abuse in the execution of existing programs, such as the Earned Income Tax Credit,” Boustany said in announcing the hearing Thursday. “We know that the federal government wastes tens of billions of dollars each year in improper payments. What we don’t know is how much more will be wasted under ObamaCare’s new federal subsidies. We look forward to hearing from GAO and examining what is happening now that the subsidies are going out the door.”
The IRS suggested Friday to taxpayers (and their tax preparers) that now is a good time for a “mid-year premium tax credit checkup.” The IRS noted that changes in income or family size may affect the size of the premium tax credit.
“If your circumstances have changed, the time is right for a mid-year checkup to see if you need to adjust the premium assistance you are receiving,” said the IRS in its weekly IRS Tax Tips email. “You should report changes that have occurred since you signed up for your health insurance plan to your Marketplace as they occur.”
If a taxpayer is receiving health insurance through one of the health insurance marketplaces or exchanges such as the federal government’s HealthCare.gov site, changes in circumstances that should be reported to the marketplace include, but are not limited to:
• an increase or decrease in income
• marriage or divorce
• the birth or adoption of a child
• starting a job with health insurance
• gaining or losing your eligibility for other health care coverage
• changing your residence
Reporting the changes will help taxpayers avoid getting too much or too little advance payment of the premium tax credit, the IRS noted.
“Getting too much means you may owe additional money or get a smaller refund when you file your taxes,” the IRS warned. “Getting too little could mean missing out on premium assistance to reduce your monthly premiums.”
Repayments of excess premium assistance may be limited to an amount between $400 and $2,500 depending on one’s income and filing status, the IRS noted. However, if advance payment of the premium tax credit was made but the taxpayer’s income for the year turns out to be too high to receive the premium tax credit, he or she will have to repay all of the payments that were made on their behalf, with no limitation.
“Therefore, it is important that you report changes in circumstances that may have occurred since you signed up for your plan,” said the IRS.
Changes in circumstances also may qualify a taxpayer for a special enrollment period to change or get insurance through the marketplace, the IRS added. In most cases, if a taxpayer qualifies for the special enrollment period, he or she will have 60 days to enroll following the change in circumstances.
More Information about special enrollment is available at HealthCare.gov, and additional information about the premium tax credit and other tax-related provisions of the health care law is available at IRS.gov/aca.