No Subsidies Without Verification Act


By Hadley Heath

Today the House of Representatives passed the No Subsidies Without Verification Act, a law designed to safeguard the health law against fraud in the delivery of subsidies through the exchanges.

The issue started in July, when the White House decided to delay the employer mandate for one year.

This delay created new policy questions about the functionality of related parts of the law - specifically the exchanges. Eligibility for an ObamaCare subsidy (delivered through an exchange) depends on a few variables: household income, household size, and whether or not you have an offer of "affordable" coverage from your employer.

The Department of Health and Human Services responded by announcing that individuals seeking subsidies in the exchanges will have to "self-attest" to their eligibility.

This could lead to a great deal of fraud, especially considering the health law also creates the "Navigator" program - a new work force tasked with enrolling as many people in ObamaCare as possible.

Navigators will want to help individuals maximize their subsidy or advanceable tax credit.  These subsidies don't actually go to individuals, but go to health insurance companies on their behalf, in order to keep the individual's payment toward their health premiums below a sliding scale percentage of their household income.  But if later the IRS discovers that someone has fraudulently obtained a subsidy (even on accident!) the individual will have to pay back the money, and could face steep punative fines as well. On the other hand, if the IRS decides not to clawback fraudulent payouts, taxpayers could be on the hook for the money. The Wall Street Journal estimates that ObamaCare fraud could cost as much as $250 billion. 

This fear of fraud was the impetus behind the legislation passed in the House today.  The matter is time sensitive, as enrollment for exchanges is set to open October 1.  


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