I am a CPA just trying to get a handle on the penalties that will apply if my clients over or under estimate their income on their application. With the repayment caps so small I can see many people "playing" the system to get the most advance credit and then just pay back the repayment penalty cap which will be much less than their advance credit. The Marketplace rep said more should come out later about that issue. Seems that if those clients continue to over or under estimate they should make them wait until they file their tax return to get any premium credit that they are elgible. Anybody else have any guidance on this scenario?
Repeat Offenders that Over or Under Estimate Their Income
- Thread starter WILDERCPA
- Start date
Won't happen anytime soon. First, you must have proven fraud is prevalent. If Dems in control, there is no such thing (just like food stamp fraud, welfare fraud, voter fraud) or is so small a percentage, they will look the other way.
If pubs control things, it will happen sooner, as they were responsible for lifting the cap on clawback recapture for those above 400% FPL.
You are about 2-3 years ahead of the government getting to this issue.
It seems like it's just ripe for abuse. Nothing has been put in place to pre-verify, outside of a request for supporting documentation when income is more than 10% different from the previous tax return. Incorrect estimation is not grounds for delay, revocation, or barring from subsidies, nor are punitive fines illustrated under the law for mis-estimating individuals.
Basically, they can game the system all they want unless the enforcement laws get some teeth. There are going to be a lot of <400%FPL people claiming subsidy as 134%FPL (read: just over the minimum cutoff) knowing that they have to pay back some, but will still pay less overall than if they filed truthfully.
Basically, they can game the system all they want unless the enforcement laws get some teeth. There are going to be a lot of <400%FPL people claiming subsidy as 134%FPL (read: just over the minimum cutoff) knowing that they have to pay back some, but will still pay less overall than if they filed truthfully.
My guess is that the system will check the last tax return, and if there is an unpaid clawback, then it will either deny an Advanced Premium Tax Credit (APTC), or deny the "advanced" feature of it and make them get the tax credit upon filing their tax return.
However, it will take several cycles for this to play through, since we are estimating income a year in advance, using tax returns from a previous year, and filing tax returns on April 15th after OEP is over.
However, it will take several cycles for this to play through, since we are estimating income a year in advance, using tax returns from a previous year, and filing tax returns on April 15th after OEP is over.
