Administration threatens to cut off ObamaCare subsidies to 360,000

The Obama administration announced Monday it will cut off tax subsidies to about 360,000 people if they do not offer proof of their income in the next two weeks.

Officials will send final notices this week to individuals who signed up for ObamaCare with income levels that didn’t match government records. The announcement marks the administration's first move to tackle the politically charged issue of income verification, which has remained a key GOP argument against the healthcare reform law.

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Those who don’t confirm their income levels could lose their tax credit and face higher premiums and higher deductibles.

Nearly 90 percent of the 8 million people who signed up for ObamaCare have received government subsidies. The average consumer pays $82 per month for a $346 plan, receiving an average subsidy of $264.

The administration had already warned that it would end coverage for the 966,000 individuals whose immigration status could not be confirmed by the government.

About 115,000 people will lose coverage this month if they do not submit their paperwork, Andy Slavitt, principal deputy administrator at the Centers for Medicare and Medicaid Services, told reporters Monday. 

A total of 1.2 million people have had income inconsistencies since the launch of ObamaCare last year. About 800,000 people have since submitted verification.

The federal government is still missing paperwork for nearly a half-million people who signed up for insurance over the last year. Slavitt stressed that individuals may be able to regain their coverage during a special enrollment period if they can prove their citizenship status or income level.

The administration will continue calling and sending letters to individuals who have not submitted the paperwork. Many have already been contacted up to a dozen times, Slavitt said.

He stressed that people with income verification issues will not lose their coverage.

“If people still pay their premiums and can demonstrate their eligibility, they’ll continue to be enrolled,” Slavitt said Monday.

Many of the verification problems stem from the HealthCare.gov website, which experienced technical glitches throughout its rollout. Slavitt was brought this year in to resolve some of the problems.

Some immigration advocates have blamed the website as a barrier for people trying to provide documentation of their citizenship. 

“I’m hopeful and confident that people will continue to respond to a greater degree,” Slavitt said, predicting a last-minute surge before the deadline. “We recognize that we still have work to do here.”

At a hearing last week by the House Ways and Means subcommittee on health, Republicans accused the Obama administration of using “the honor system” when asking consumers to self-disclose their income. 

“That’s why the White House has lost, in my view, the trust of the American people,” subcommittee Chairman Kevin Brady (R-Texas) told Slavitt at the hearing.

—This story was updated at 5:58 p.m.