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Hurdles for ObamaCare in 2nd Sign-up Season
- Thread starter Tkruger
- Start date
- 8,448
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Look guys and gals you're making this way too complicated. Simply tell the client what MAGI is at 400% FPL. Tell them if you go over that number by one penny you will have to back every penny of subsidy you got. The ways around that are to contribute more to your IRA or find more deductions. Consult with your tax professional and they will help you.
When I tell the people I write what the 400% FPL is they always tell me if I make that much I'm not gonna worry about paying the subsidy back. As it's a good thing. I'm really at a loss as to what type of people you guys are dealing with where this is such a huge concern.
Oh and by the way this will be my last post in here until Feb 15th 2015 good luck to you all.....Houcoogster signing out!
When I tell the people I write what the 400% FPL is they always tell me if I make that much I'm not gonna worry about paying the subsidy back. As it's a good thing. I'm really at a loss as to what type of people you guys are dealing with where this is such a huge concern.
Oh and by the way this will be my last post in here until Feb 15th 2015 good luck to you all.....Houcoogster signing out!
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I hope he's kidding. HouCoogster balances the negatives with positive insights. He'll probably just sign in on 2/15/2015 after making a ton of $$$$ during O.E. to say goodbye permanently.
Clawbacks are a big issue, but don't overlook the fraud issue. Historically, the IRS questions fraud as a motive when the actual figures differ 25% or more from what was originally disclosed.
Sure, there are extenuating circumstances. But sometimes fraud is clear to see.
The penalty for fraud in the PPACA starts at $25,000 for neglect to provide correct information and soars to $250,000 for knowingly and willingly providing inaccurate information (committing fraud).
And, fraud is not only taking too much premium subsidy, but also applies to people taking a CSR plan when they know they don't qualify for it. They may feel good knowing there is no clawback on CSR. However, there are still penalties and legal ramifications for fraud.
From CMS Reg 9949-F, found at https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-11657.pdf
Notice a few things:
1 - Agents/brokers are mentioned in there, too.
2 - This applies to disclosure of Personally Identifiable Information (PII), too, but I just didn't copy & paste most of that
3 - Notice this applies to CSR too, not just APTC
4 - Notice that willfully providing false information has a larger penalty than just neglecting to provide information (i.e. claiming you only make $30,000 when you know it's $120,000 may carry a worse penalty than forgetting to call the exchange and tell them you had a change of circumstances)
5 - Notice that a history of doing this is a reason that they would impose the penalty (i.e. an agent who has scores of these kinds of applications, or a person who cheats on his taxes often and turns around and cheats on a subsidy app).
So, that should scare people into simply telling the truth and being upfront with information! Next question is whether or not the IRS or HHS will actually impose such penalties in this politically charged environment... I dunno. I just know that I would rather just tell the truth.
Sure, there are extenuating circumstances. But sometimes fraud is clear to see.
The penalty for fraud in the PPACA starts at $25,000 for neglect to provide correct information and soars to $250,000 for knowingly and willingly providing inaccurate information (committing fraud).
And, fraud is not only taking too much premium subsidy, but also applies to people taking a CSR plan when they know they don't qualify for it. They may feel good knowing there is no clawback on CSR. However, there are still penalties and legal ramifications for fraud.
From CMS Reg 9949-F, found at https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-11657.pdf
(a) Grounds for imposing civil money penalties.
(1) HHS may impose civil money penalties on any person, as defined in paragraph (a)(2) of this section, if, based on credible evidence, HHS reasonably determines that a person has engaged in one or more of the following actions:
(i) Failure to provide correct information under section 1411(b) of the Affordable Care Act where such failure is attributable to negligence or disregard of any rules or regulations of the Secretary with negligence and disregard defined as they are in section 6662 of the Internal
Revenue Code of 1986:
(A) "Negligence" includes any failure to make a reasonable attempt to provide accurate, complete, and comprehensive information; and
(B) "Disregard" includes any careless, reckless, or intentional disregard for any rules or regulations of the Secretary.
(ii) Knowing and willful provision of false or fraudulent information required under section 1411(b) of the Affordable Care Act, where knowing and willful means the intentional provision of information that the person knows to be false or fraudulent;
(iii) Knowing and willful use or disclosure of information in violation of section 1411(g) of the Affordable Care Act, where knowing and willful means the intentional use or disclosure of information in violation of section 1411(g). Such violations would include, but not be limited to, the following:
(A) Any use or disclosure performed which violates relevant privacy and security standards established by the Exchange pursuant to §155.260;
(B) Any other use or disclosure which has not been determined by the Secretary to be in compliance with section 1411(g)(2)(A) of the Affordable Care Act pursuant to §155.260(a); and
(C) Any other use or disclosure which is not necessary to carry out a function described in a contract with a non-Exchange entity executed pursuant to §155.260(b)(2).
(2) For purposes of this section, the term "person" is defined to include, but is not limited to, all individuals; corporations; Exchanges; Medicaid and CHIP agencies; other entities gaining access to personally identifiable information submitted to an Exchange to carry out additional functions which the Secretary has determined ensure the efficient operation of the Exchange pursuant to §155.260(a)(1); and non-Exchange entities as defined in §155.260(b) which includes agents, brokers, Web-brokers, QHP issuers, Navigators, non-Navigator assistance personnel, certified application counselors, in-person assistors, and other third party contractors.
(b) Factors in determining the amount of civil money penalties imposed.
In determining the amount of civil money penalties, HHS may take into account factors which include, but are not limited to, the following:
(1) The nature and circumstances of the conduct including, but not limited to:
(i) The number of violations;
(ii) The severity of the violations;
(iii) The person's history with the Exchange including any prior violations that would indicate whether the violation is an isolated occurrence or represents a pattern of behavior;
(iv) The length of time of the violation;
(v) The number of individuals affected or potentially affected;
(vi) The extent to which the person received compensation or other consideration associated with the violation;
(vii) Any documentation provided in any complaint or other information, as well as any additional information provided by the individual to refute performing the violation; and
(viii) Whether other remedies or penalties have been imposed for the same conduct or occurrence.
(2) The nature of the harm resulting from, or reasonably expected to result from, the violation, including but not limited to:
(i) Whether the violation resulted in actual or potential financial harm;
(ii) Whether there was actual or potential harm to an individual's reputation;
(iii) Whether the violation hindered or could have hindered an individual's ability to obtain health insurance coverage;
(v) The actual or potential impact of the provision of false or fraudulent information or of the improper use or disclosure of the information; and
(vi) Whether any person received a more favorable eligibility determination for enrollment in a QHP or insurance affordability program, such as greater advance payment of the premium tax credits or cost-sharing reductions than he or she would be eligible for if the correct information had been provided.
(3) No penalty will be imposed under paragraph (a)(1)(i) of this section if HHS determines that there was a reasonable cause for the failure to provide correct information required under section 1411(b) of the Affordable Care Act and that the person acted in good faith.
(c) Maximum penalty.
The amount of a civil money penalty will be determined by HHS in accordance with paragraph (b) of this section.
(1) The following provisions provide maximum penalties for a single "plan year," where "plan year" has the same meaning as at §155.20:
(i) Any person who fails to provide correct information as specified in paragraph (a)(1)(i) of this section may be subject to a maximum civil money penalty of $25,000 for each application, as defined at paragraph (c)(1)(iii) of this section, pursuant to which a person fails to provide correct information.
(ii) Any person who knowingly and willfully provides false information as specified in paragraph (a)(1)(ii) of this section may be subject to a maximum civil money penalty of $250,000 for each application, as defined at paragraph (c)(1)(iii) of this section, on which a person knowingly and willfully provides false information.
(iii) For the purposes of this subsection, "application" is defined as a submission of information, whether through an online portal, over the telephone through a call center, or through a paper submission process, in which the information is provided in relation to an eligibility determination; an eligibility redetermination based on a change in an individual's circumstances; or an annual eligibility redetermination for any of the following:
(A) Enrollment in a qualified health plan;
(B) Premium tax credits or cost sharing reductions; or
(C) An exemption from the individual shared responsibility payment...
(1) HHS may impose civil money penalties on any person, as defined in paragraph (a)(2) of this section, if, based on credible evidence, HHS reasonably determines that a person has engaged in one or more of the following actions:
(i) Failure to provide correct information under section 1411(b) of the Affordable Care Act where such failure is attributable to negligence or disregard of any rules or regulations of the Secretary with negligence and disregard defined as they are in section 6662 of the Internal
Revenue Code of 1986:
(A) "Negligence" includes any failure to make a reasonable attempt to provide accurate, complete, and comprehensive information; and
(B) "Disregard" includes any careless, reckless, or intentional disregard for any rules or regulations of the Secretary.
(ii) Knowing and willful provision of false or fraudulent information required under section 1411(b) of the Affordable Care Act, where knowing and willful means the intentional provision of information that the person knows to be false or fraudulent;
(iii) Knowing and willful use or disclosure of information in violation of section 1411(g) of the Affordable Care Act, where knowing and willful means the intentional use or disclosure of information in violation of section 1411(g). Such violations would include, but not be limited to, the following:
(A) Any use or disclosure performed which violates relevant privacy and security standards established by the Exchange pursuant to §155.260;
(B) Any other use or disclosure which has not been determined by the Secretary to be in compliance with section 1411(g)(2)(A) of the Affordable Care Act pursuant to §155.260(a); and
(C) Any other use or disclosure which is not necessary to carry out a function described in a contract with a non-Exchange entity executed pursuant to §155.260(b)(2).
(2) For purposes of this section, the term "person" is defined to include, but is not limited to, all individuals; corporations; Exchanges; Medicaid and CHIP agencies; other entities gaining access to personally identifiable information submitted to an Exchange to carry out additional functions which the Secretary has determined ensure the efficient operation of the Exchange pursuant to §155.260(a)(1); and non-Exchange entities as defined in §155.260(b) which includes agents, brokers, Web-brokers, QHP issuers, Navigators, non-Navigator assistance personnel, certified application counselors, in-person assistors, and other third party contractors.
(b) Factors in determining the amount of civil money penalties imposed.
In determining the amount of civil money penalties, HHS may take into account factors which include, but are not limited to, the following:
(1) The nature and circumstances of the conduct including, but not limited to:
(i) The number of violations;
(ii) The severity of the violations;
(iii) The person's history with the Exchange including any prior violations that would indicate whether the violation is an isolated occurrence or represents a pattern of behavior;
(iv) The length of time of the violation;
(v) The number of individuals affected or potentially affected;
(vi) The extent to which the person received compensation or other consideration associated with the violation;
(vii) Any documentation provided in any complaint or other information, as well as any additional information provided by the individual to refute performing the violation; and
(viii) Whether other remedies or penalties have been imposed for the same conduct or occurrence.
(2) The nature of the harm resulting from, or reasonably expected to result from, the violation, including but not limited to:
(i) Whether the violation resulted in actual or potential financial harm;
(ii) Whether there was actual or potential harm to an individual's reputation;
(iii) Whether the violation hindered or could have hindered an individual's ability to obtain health insurance coverage;
(v) The actual or potential impact of the provision of false or fraudulent information or of the improper use or disclosure of the information; and
(vi) Whether any person received a more favorable eligibility determination for enrollment in a QHP or insurance affordability program, such as greater advance payment of the premium tax credits or cost-sharing reductions than he or she would be eligible for if the correct information had been provided.
(3) No penalty will be imposed under paragraph (a)(1)(i) of this section if HHS determines that there was a reasonable cause for the failure to provide correct information required under section 1411(b) of the Affordable Care Act and that the person acted in good faith.
(c) Maximum penalty.
The amount of a civil money penalty will be determined by HHS in accordance with paragraph (b) of this section.
(1) The following provisions provide maximum penalties for a single "plan year," where "plan year" has the same meaning as at §155.20:
(i) Any person who fails to provide correct information as specified in paragraph (a)(1)(i) of this section may be subject to a maximum civil money penalty of $25,000 for each application, as defined at paragraph (c)(1)(iii) of this section, pursuant to which a person fails to provide correct information.
(ii) Any person who knowingly and willfully provides false information as specified in paragraph (a)(1)(ii) of this section may be subject to a maximum civil money penalty of $250,000 for each application, as defined at paragraph (c)(1)(iii) of this section, on which a person knowingly and willfully provides false information.
(iii) For the purposes of this subsection, "application" is defined as a submission of information, whether through an online portal, over the telephone through a call center, or through a paper submission process, in which the information is provided in relation to an eligibility determination; an eligibility redetermination based on a change in an individual's circumstances; or an annual eligibility redetermination for any of the following:
(A) Enrollment in a qualified health plan;
(B) Premium tax credits or cost sharing reductions; or
(C) An exemption from the individual shared responsibility payment...
Notice a few things:
1 - Agents/brokers are mentioned in there, too.
2 - This applies to disclosure of Personally Identifiable Information (PII), too, but I just didn't copy & paste most of that
3 - Notice this applies to CSR too, not just APTC
4 - Notice that willfully providing false information has a larger penalty than just neglecting to provide information (i.e. claiming you only make $30,000 when you know it's $120,000 may carry a worse penalty than forgetting to call the exchange and tell them you had a change of circumstances)
5 - Notice that a history of doing this is a reason that they would impose the penalty (i.e. an agent who has scores of these kinds of applications, or a person who cheats on his taxes often and turns around and cheats on a subsidy app).
So, that should scare people into simply telling the truth and being upfront with information! Next question is whether or not the IRS or HHS will actually impose such penalties in this politically charged environment... I dunno. I just know that I would rather just tell the truth.
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I'm surprised they did not go with the model already in place for Medicare Part B, which has premium based on income, adding an income-base subsidy scale to Medicsre's existing income-based "adjustment" for higher incomes. They use the most recent completed tax return year, which is currently 2012. ACA did add an income-based adjustment for Part D that followed the Part B model.
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Wowza Ann, thanks for posting that IRS verbage...it does sound scary- I always tell folks taking the subsidy..consult your tax advisor because as an agent I can't advise you and I'm not responsible for the MAGI you project...Its not on me. Its on you and your accountant. Its your number.
I only write Exchange plans for people who are under 250% FPL so they get the extra help, for clients at or near the 400% FPL it is a waste of time to get a subsidized plan because of the IRA oversight and the fact that Off Exchange plans are most likely about the same cost (or less) than the subsidized plan.
The last thing anyone who is self employed wants is for the IRS to have additional oversight on their tax returns. The typical salaried person doesn't have this issue because their income is either consistent each year or someone in their family is offered group benefits and can't get a subsidy or both.
As everyone on this forum (except for you) understands, the clawback process is a disgrace, particularly since the Medicare Part B premium is based on a prior year's income. All it does is present an opportunity to potentially criminalize (as Ann so astutely has pointed out) the average person who isn't paying attention to the way income affects their health insurance premium (you can tell clients this up front until you are blue in the face and it won't make them remember it months later).
This aspect of ACA is a public relations nightmare and will probably cause it to get a major overhaul or repealed in a couple of years after POTUS is out of office-he is lucky that the election is before anyone gets a tax bill based on clawback, it would sweep his party out of office in a heartbeat.
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