Built into the Obamacare bill is a provision requiring the IRS by the end of June to notify people who did not have the minimum required health insurance coverage (MEC) that they were non-compliant and to inform them what was available via their state’s exchanges.
According to a report released by the Treasury Inspector General for Tax Administration on Thursday (report embedded below), the IRS sent the letters late, skipped some people who were supposed to get the letter, and “misled” people about the cost of plans. Note: misled is government doublespeak for lying.
The provision of Obamacare the report discusses (ACA Section 1502(c)) states the following:
NOTIFICATION OF NONENROLLMENT — Not later than June 30 of each year, the Secretary of the Treasury, acting through the Internal Revenue Service and in consultation with the Secretary of Health and Human Services, shall send a notification to each individual who files an individual income tax return and who is not enrolled in minimum essential coverage (as defined in section 5000A of the Internal Revenue Code of 1986). Such notification shall contain information on the services available through the Exchange operating in the State in which such individual resides.
The purpose of the IRS letter is to encourage Americans to comply with Obamacare’s individual mandate that penalizes them for not having the government-defined appropriate coverage.
When the IRS finally sent the letters for the 2015 tax year, it stated a monthly cost to purchase the need coverage ($75/month) that was less than half the actual cost ($168/month).
The agency attempted to explain the discrepancy by saying that they used numbers provided by the Department of Health and Human Services, adding that the $75 figure was true for “some taxpayers.” But when the inspector general requested documentation of those estimates but did not receive it.
According to page seven of the report:
The IRS’s notification letters to taxpayers without MEC stated that most people can find an insurance plan through HealthCare.gov for $75 a month or less after financial assistance. However, our analysis of Exchange data for 5.4 million individuals who enrolled in health coverage through an Exchange in Calendar Year 2015 identified that the actual cost,18 after financial assistance, for approximately 3.4 million (63 percent) taxpayers exceeded $75 a month. The average cost to these taxpayers was $168 a month after financial assistance. As a result, many of the nearly 7.5 million taxpayers who receive letters and seek insurance may feel misled if the actual cost of their insurance is much higher than the $75 per month detailed in their notification letter.
IRS management stated that the CMS [The Centers for Medicare and Medicaid Services] provided the $75 amount. The CMS noted that this amount was based on studies completed by the Department of Health and Human Services (HHS). The studies concluded that 72 percent of enrollees can find a plan for $75 or less per month after receiving any applicable Advance Premium Tax Credit. Our review of the HHS’s studies found that the $75 is an estimate based on individuals residing in only 38 States who paid health care premiums and received Advance Premium Tax Credits. In addition, the $75 is based on the average premiums for lower-tiered plans that provide fewer benefits than higher premium plans. Thus, the $75 is based on the cost that taxpayers can find coverage for on www.HealthCare.gov after financial assistance for this lone low-cost health plan rather than the cost of plans that taxpayers actually select.
According to the inspector general’s report, the IRS sent the letters to approximately 7.5 million Americans but approximately 5.2 million Americans who were supposed to receive the letters—did not…