The Affordable Care Act has become very time consuming for tax advisors. The Chairman of the Senate Finance Committee has now made it time consuming for the office of the Treasury Inspector General for Tax Administration. Not so time consuming however, that they took time to make any recommendations. But then, my guess is that no recommendations were requested of TIGTA.

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Office of Audit

Affordable Care Act: Analysis of Tax Year 2014 Nonfilers Who Received Advance Premium Tax Credit Payments

Final Report Issued on February 28, 2017

Highlights

Highlights of Reference Number: 2017-43-021 to the Internal Revenue Service Commissioner for the Wage and Investment Division.

IMPACT ON TAXPAYERS

The Affordable Care Act created the refundable Premium Tax Credit (PTC) to help offset the cost of health care insurance for those with low or moderate income. Individuals who received the PTC in advance are required to reconcile the amount paid on their behalf to the allowable amount of the PTC on their tax return.

WHY TIGTA DID THE AUDIT

This audit was conducted at the request of the Chairman of the U.S. Senate Committee on Finance. The Committee asked TIGTA to examine the application, correspondence, and other documentation regarding the integrity checks conducted of individuals who received Advance Premium Tax Credit (APTC) payments during Calendar Year 2014 and who have not yet filed their required Tax Year 2014 return to ensure that these individuals claimed eligibility under their true identities and qualified for the APTC.

Our review was performed using Calendar Year 2014 application and enrollment data obtained directly from the Federal Exchange and the California, New York, and Vermont State Exchanges. These four Exchanges account for 261,872 (92 percent) of the 283,738 nonfilers TIGTA identified as of December 31, 2015. The results included in our assessment are solely based on the identity verification and application data provided by the Exchanges.

WHAT TIGTA FOUND

The Exchanges did not verify the identity of all Calendar Year 2014 APTC nonfilers. TIGTA’s analysis of the enrollment and application data for the 261,872 nonfilers found that the Exchanges did not successfully verify the identity of 35,276 (13.5 percent) individuals. These individuals had more than $112 million in APTC paid to insurers on their behalf during Calendar Year 2014.

In addition, the Exchanges did not verify all nonfilers’ eligibility to receive the APTC. Our review of 178,083 nonfilers (whose identities were successfully verified) determined that 11,388 (6 percent) received $21.8 million in the APTCs even though data provided by the Exchange indicated that one or more of the APTC eligibility requirements were not met. Finally, the Exchanges did not verify one or more of the eligibility requirements or the data TIGTA was provided were blank for 2,498 (1 percent) of the 178,083 nonfilers. These nonfilers had $6.9 million in the APTC paid on their behalf.

The results included in our assessment are based solely on the identity verification and application data provided by the Exchanges. Concerns have been raised by both the Government Accountability Office and the Department of Health and Human Services Office of Inspector General regarding the effectiveness of the Exchange verification processes.

WHAT TIGTA RECOMMENDED

No recommendations were made in the report. This report was provided to the IRS, the Department of Health and Human Services, and the Centers for Medicare and Medicaid Services for their review and comments. Comments provided by the Centers for Medicare and Medicaid Services management are provided in Appendix IX. IRS management did not provide comments to this report.