Government Watch

$750 Million in Obamacare Tax Credits May Have Gone to Illegal Immigrants, Senate Report Finds

obamacare-2From – – By Leah Jessen

The government granted up to $750 million in Obamacare tax credits to 500,000 persons who weren’t eligible, many of whom may have been illegal immigrants, a Senate report says.

Half a million individuals mistakenly received the tax credits because of a lapse in verification of their legal status and a lack of coordination among government agencies, the report determined.

Although they failed to verify citizenship or their legal status, they got the “advanced premium” tax credits under the Affordable Care Act. The taxpayer dollars are awarded on the basis of income to help lower premium costs on Obamacare’s marketplace insurance exchanges.

Sen. Ron Johnson, R-Wis., chairman of the Homeland Security and Governmental Affairs Committee, released findings Monday that focus on the Centers for Medicare and Medicaid Services’ “wasteful practice of distributing cost assistance in the form [of] tax credits to Obamacare enrollees without first verifying the enrollees’ citizenship or lawful presence in the United States.”

The Centers for Medicare and Medicaid Services, part of the Department of Health and Human Services, oversees Obamacare.

The report, conducted by the Republican staff for Johnson’s committee, says the agency was responsible for distributing credits and subsidies to insurers on behalf of individuals. The Internal Revenue Service was responsible for reconciling the amount with what individuals are entitled to receive.

press release from the committee said the report “found that the Internal Revenue Service lacks an effective plan to recoup these improperly awarded funds.”

In this “pay and chase” model used to pay and recoup funds, the Department of the Treasury “pays a portion of an enrollee’s premium without confirming whether the enrollee is eligible for such a payment, and then ‘chases’ after the enrollee to recover the payment if is later determined that the enrollee was ineligible,” the report states.

The Centers for Medicare and Medicaid Services, or CMS, has used this model to pay Medicare claims for 45 years. The result, according to the report, was “more than $60 billion, per year, in Medicare fraud.” It adds:

In 2014, the exchanges paid out approximately $15.5 billion in advanced premium tax credits to an estimated 4.5 million taxpayers. The IRS estimates that only 10 percent of taxpayers—300,000 individuals—received the correct amount of advanced premium tax credit, and that approximately 50 percent of taxpayers—1.6 million individuals—received excess credit.

Last March, Johnson asked Health and Human Services Secretary Sylvia Burwell about the processes for eligibility verification and recouping of improper payments. He also wrote to the IRS.

“While CMS and the IRS must improve their coordination to ensure the administration recoups the $750 million improperly awarded,” the report says, “they also must work to prevent future improper spending of this type.”

Republican staff calculated the findings based on data provided by the agencies as of last June. CMS confirmed to Fox News Channel that 471,000 customers with Obamacare coverage last year failed to prove legal status.

“Lack of verification does not mean an individual is ineligible for financial assistance, but only that a marketplace did not receive sufficient information to verify eligibility in the time period outlined in the law,” agency spokesman Aaron Albright told Fox.

To test the accuracy of the verification process for the Obamacare insurance exchanges, the Government Accountability Office submitted applications from 12 phony applicants, over the phone and online, during the first enrollment period from October 2013 to April 2014.

The new Senate committee report notes that 11 of the 12 applicants were able to obtain subsidized health coverage and received a total of about $30,000 in advanced premium tax credits. The report states:

For seven of the 11 successful applicants, GAO did not submit all required verification documentation, but the exchanges nonetheless provided subsidized coverage. The exchanges automatically re-enrolled all 11 fictitious enrollees for 2015 coverage. Eventually, the exchanges terminated coverage for six of the enrollees based on failure to provide documentation of eligibility. However, for five of the six terminations, GAO obtained coverage reinstatement and increases in advanced premium tax credit amounts.

In January, President Barack Obama vetoed a bill that would have repealed much of Obamacare. The House failed to override the veto.

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7 years ago

PaulE is entirely correct. The only thing the federal government is good at, is harassing businesses and taxpayers. It’s called the IRS, EPA, FDA, FBI, etc, etc. if it’s not harassment, why are almost all new federal employees attorneys? Obama “hired” 12,000 attorneys for the IRS, that’s right, attorneys not accountants! I’d like to hear a Presidential candidate state that when elected, he would fire, layoff, execute would be better, all attorneys other than from the Justice department and even then, decrease them by 50%! … I know, but I can dream can’t I!

Ivan Berry
7 years ago
Reply to  Rik

Your dream, RIK, is better than this nightmare.
The national debt…did you know that without LBJ’s war on poverty and all that progress(ivism) the debt could have been close to zero? What with the inane war on drugs, the war on Christians, the war on families, the war on guns, the war on police, the war on the middleclass, etc. etc., it’s no wonder this experiment in liberty is coming to an end.
Hear, Hear to your dream. And yes, PaulE is right.

7 years ago

Not to worry. If either Hillary or Bernie win the 2016 election, the amount of taxpayer money we’ll be flushing down the toilet each and every year in not only subsidies to Obamacare (or its infinitely more expensive successor single-payer healthcare), but also in all the new, expanded, across the board freebies that both these socialists are currently promising their supporters, will run not in the hundreds of millions, as this article indicates just on Obamacare subsidies, but over an additional two trillion a year. Yes, that’s trillion with a “T”, as a number of organizations have already estimated what all of Bernie’s “new entitlements” (free stuff) or “rights” as he likes to refer to them would add up to. That’s represents roughly increasing our annual federal budget by nearly 50 percent per year from $3.6 trillion dollars to almost $6 trillion dollars annually. Hillary, being desperate to win any of Bernie’s supporters, will promise to deliver the same free stuff. So strap in for massive, across the board (sorry it won’t just be the so-called “rich” footing the bill) tax hikes that will be necessary to pay for all this free stuff.

As for the federal government being too incompetent to verify eligibility for Obamacare subsidies and costing taxpayers money, I don’t expect the federal government to run efficiently. It has a proven track record of failing to do so countless times, outside the area of the military, for decades. That is why the role of the federal government is supposed to be limited in size and scope. It does so few things well, that adding any new roles and responsibilities is an open invitation to introduce incompetence and waste into anything it manages. Of course the idea of scaling back the federal government’s involvement in almost anything seems like an unacceptably horrible idea to so many people. Until the attitude changes significantly, we will see many more examples like this being reported for any number of federally driven programs.

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