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Regulation and Compliance > Federal Regulation > IRS

CMS’ Health Premium Tax Credit Verification Programs Get Failing Grade From IRS

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Officials at the U.S. Government Accountability Office say the federal government has not created properly designed systems for determining whether the people getting Affordable Care Act premium tax credits are really eligible for the tax credits.

The Internal Revenue Service has either failed to design, or done a poor job of designing, most of the systems it would need to determine whether taxpayers are complying with the Affordable Care Act tax provisions related to the premium tax credit program, or the provisions that require many people to own a minimum amount of major medical insurance or else pay a penalty, GAO officials say.

(Related: GAO Airs 3 Bags of ACA Exchange Dirty Laundry)

GAO officials summarize their bleak view of federal Affordable Care Act verification efforts in a new report prepared for the House and Senate Appropriations Committees.

The Centers for Medicare and Medicaid Services was supposed to design and implement four sets of control activities related to verifying the accuracy of premium tax credits to Affordable Care Act exchange plan issuers, and it has designed all of those controls properly and implemented them, GAO officials say in the new report.

CMS was supposed to come up with control activities related to verifying whether applicants for premium tax credits are U.S. citizens, or lawfully present in the United States. CMS has designed a control to achieve that objective properly and implemented it, officials say.

CMS has not properly designed control activities for eight other types of verification, such as verifying where people live, and verifying compliance with tax filing requirements, officials say.

The IRS was supposed to come up with controls for nine Affordable Care Act activities, including eight related to the premium tax credit program and one related to the Affordable Care Act “individual shared responsibility payment,” or penalty for failure to have minimum essential coverage.

The IRS has designed and implemented a system for identifying and reviewing tax returns that contain errors, but it gets only partial credit, because it uses those methods only on returns over a certain dollar threshold, officials say.

The GAO gave the IRS a zero on the eight other controls, saying it has not properly designed control activities to achieve the required objectives.

John Koskinen, the IRS commissioner, said the IRS has had trouble coming up with controls because the Affordable Care Act is complicated, resources are limited, and many of the data it could get from outside vendors is incomplete, out-of-date, or otherwise unsuitable for use in tax administration.

“Also, the complexity of the law means that not every situation is a matter for simple adjudication,” Koskinen says.

An official at the U.S. Department of Health and Human Services, the parent of CMS, said HHS takes the GAO recommendations seriously, has taken steps to resolve some issues and is working to resolve others.

— Read Watchdog Finds $447 Million IRS ACA Tax Credit Math Error on ThinkAdvisor


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