According to the Centers for Medicare & Medicaid Services (CMS), more than 360,000 Americans who signed up for health insurance on the marketplace websites may lose their coverage if they can’t provide accurate income information by Sept. 30. In May, the agency noticed income discrepancies for approximately 1.2 million households nationwide, and officials have yet to resolve many of these reporting discrepancies. The CMS uses tax and other official government records to verify income, and the numbers aren’t stacking up like they should.
Loss of Subsidy Payments
About 279,000 households can expect government officials to contact them regarding income discrepancy over the next two weeks. If enrollees can’t verify the accuracy of their income, then they may have to repay their subsidy amounts or face losing their insurance coverage as early as October. Subsidies help make insurance more affordable for millions of low-income families in the United States. Losing these subsidies would mean a significant loss in coverage and medical care.
Of the eight million individuals who signed up for health insurance using the health insurance exchange site known as the marketplace, approximately 85 percent were granted subsidies. In addition to losing their healthcare coverage, these people could also face serious penalties for attempting to defraud the federal government.
However, officials don’t necessarily assume that people have acted with ill intention. The CMS suspects that some enrollees may have submitted current documentation that doesn’t match outdated government records. In the case of an honest mistake, the government is simply asking for marketplace enrollees to verify their current income information with updated documentation.
Issues with Inaccurate Reporting
The main problem with inaccurate reporting is that it affects other people’s ability to receive subsidies. Some people unintentionally submit inaccurate documentation, but others may attempt to milk the system by purposely understating their income. Not only will this practice result in an inefficient system, but it will also lead to heavy fines and possible jail time depending on the level of prosecution against fraud. Subsidies exist to help people pay for health insurance. Taking unfair advantage of the system only closes widespread access to affordable healthcare.
To fix the problem, marketplace enrollees just need to verify their current income information if they receive a call or letter from the Centers for Medicare & Medicaid Services. Verification may involve submitting current pay stubs or tax records. People should keep in mind that bonus information and other documents related to income changes should be submitted to the government as well.
For 2015, open enrollment on the marketplace lasts from Nov. 15 through Feb. 15. Enrollees should spend some time making sure that they submit the right income information before they confirm their enrollment. The amount that people receive in subsidy payments depends primarily on income, and income is subject to change at least once per year due to raises. As long as health insurance beneficiaries submit the correct information to the government, the system will work appropriately for as many people as possible.