The Internal Revenue Service is generally providing accurate income and family size information to health insurance exchanges to determine the eligibility of individuals for health insurance and the Advance Premium Tax Credit, according to a new government report.
The report, from the Treasury Inspector General for Tax Administration, noted that beginning Jan. 1, 2014, most individuals must obtain health insurance that meets minimum requirements. Health insurance exchanges are intended to provide a place for Americans to shop for health insurance. Qualified individuals can request the Premium Tax Credit to assist with paying for health insurance. The credit may be paid directly to an individual’s health insurance provider as a partial payment for their monthly premiums. This is known as the Advance Premium Tax Credit.
TIGTA’s audit was initiated to ensure that the IRS is providing accurate information to the exchanges to assist in determining an individual’s eligibility to use the exchange and receive the APTC.
“In nearly all instances, the IRS correctly provided accurate information to the health exchanges on income and family sizes,” said TIGTA Inspector General J. Russell George in a statement. “Accurate information is essential for an exchange to determine if an applicant is eligible to obtain insurance coverage through the exchange.”
TIGTA’s review of the IRS’s response to 101,018 Income and Family Size Verification information requests between Oct. 1 and Oct. 4, 2013 showed that the IRS, based on the information provided by the exchange, provided accurate responses for 100,985 of the 101,018 requests, or 99.7 percent.
However, TIGTA identified 33 requests for which the IRS incorrectly notified the exchange that it could not provide the requested tax information for individuals because the IRS was unable to match the name on the application to IRS data records. These responses were incorrect because the individual’s name used on the application was in fact available in IRS data records. This happened because of a programming error in which the IRS data did not always contain the most recent name information showing on the individual’s tax account.
In addition, TIGTA found that the IRS, based on information furnished by the exchange, accurately calculated the maximum monthly APTC for 120,824 requests received between Oct. 1 and Oct. 14, 2013.
Despite the positive results in TIGTA’s audit, a preliminary report released last month by the Government Accountability Office used undercover investigators who applied for the premium tax credits and found it was easy to falsify the information they provided (see GAO Finds It Easy to Fake Applications for Health Insurance Premium Tax Credits). The report was the subject of a congressional hearing and provoked fresh criticism of the Affordable Care Act among some Republican lawmakers, while Democrats on the committee pointed out that there were penalties built into the law for taxpayers who provide false information in applying for the tax credits.
“The IRS takes its responsibility of providing accurate Advance Premium Tax Credit (APTC) and Income and Family Size Verification (IFSV) responses to the marketplace very seriously,” said a statement forwarded by an IRS spokesman. “We are pleased that TIGTA has substantiated our efforts by showing 100 percent accuracy rate for our calculation of the monthly maximum APTC and over 99 percent accuracy rate of IFSV responses to the marketplaces. The Affordable Care Act Program Management Office has put in place sound management practices that have been recognized by TIGTA in earlier reviews. The IRS is committed to continuously improving IRS information technology systems and processes, and has already taken steps to correct the few discrepancies identified in the report.”
TIGTA recommended that the IRS’s chief technology officer ensure that IRS data records used to provide responses to exchange requests accurately reflect an individual’s most recent name information contained in IRS data. The IRS agreed with TIGTA’s recommendation and said it has already implemented programing modifications so that name information fields are now consistent with the most recent name information on the individual’s tax account.
“The Affordable Care Act (ACA) Program Management Office has put in place sound management practices that have been recognized by the Treasury Inspector General for Tax Administration (TIGTA) in earlier reviews,” wrote IRS chief technology officer Terence V. Milholland in response to the report. “I am committed to continuously improving IRS information technology systems and processes, and the ACA IT Program Management Office has already taken steps to correct the few discrepancies identified in your report. I am also pleased to say that with the perseverance and commitment of our team, the corrective action specified within this audit has been corrected and completed.”