ObamaCare subsidies may be wrong for over 1 million Americans, report says

July 14, 2013: A doctor in Altamont, Tenn., examines a patient at a rural clinic. (Reuters)

Hundreds of thousands of Americans signed up for coverage under ObamaCare may be receiving incorrect subsidy payments -- some bigger than they actually deserve -- from the federal government, The Washington Post reported.

The government has identified the errors, which are the result of discrepancies in income listings on insurance applications and those on file with the Internal Revenue Service, but has been unable to fix the problem, according to the report.

Since income information is used to determine subsidy eligibility under the law, the federal government may be paying insurance subsidies that are too generous or not enough for more than 1 million Americans with income discrepancies.

Only a fraction of consumers notified about the discrepancies have responded to federal health officials' requests to submit pay stubs or other proof of their income. Officials told The Washington Post they do not yet know the percentages of overpayments or underpayments.

According to internal documents obtained by the newspaper, income discrepancies exist on 1.1 million to 1.5 million out of nearly 4 million applications containing inconsistencies. About 650,000 pieces of evidence for income verification have reportedly been submitted by consumers.

Because technology does not exist to match income "proof" with applications, officials plan to start the work of sorting out inaccurate incomes and subsidies by hand starting this summer, Obama administration officials told The Post.

Americans receiving excess subsidies are currently required to return any unwarranted payments next year, according to the report.

Julie Bataille, communications director for the Centers for Medicare and Medicaid Services, said that despite the inaccurate subsidies, the federal health insurance marketplace has processed tens of millions of pieces of data successfully.

"While most data matched up right away during the application process, we take seriously the cases that require more work and have a system in place to expeditiously resolve these data inconsistencies," Bataille told The Post.

She added that federal health officials are "working every day to make sure individuals and families get the tax credits they deserve and that no one is receiving a tax credit they shouldn’t."

During last year's budget negotiations, Health and Human Services Secretary Kathleen Sebelius vowed to vet income information that people submitted as part of their health insurance applications after Republican lawmakers voiced concerns about the potential for fraud.

Consumer advocates told The Post they are concerned about the consequences of inaccurate income information for ObamaCare enrollees.

"I have this sick feeling that there are these people out there who have made unintentional errors, and in a few years will be subject to massive tax bills," Jessica Waltman, senior vice president for government affairs at the National Association of Health Underwriters, told the newspaper.

The Associated Press contributed to this report.

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