Income Verification in Open Enrollment

It was recently announced by the White House that they are pushing back the implementation of the verification system that health insurance marketplaces are supposed to use next year to 2015. until then, the health insurance Marketplace would have to rely on self-verification systems. This recent development does not mean that the marketplace will not be doing any kind of verification whatsoever, its efforts will only be scaled back.

The verification system was supposed to help the Marketplace determine who are the people who qualify for the new benefits of the Affordable Care Act; including the subsidies for purchasing health insurance for citizens who live way below the poverty line. For instance, if a person only makes $15,000 a year, then he/she qualifies for Medicaid. Conversely, if the person has already received affordable health insurance from his/her employer, like something that costs less than 9.5% of their total annual income, then they are no longer eligible for tax credits that are offered under the new law.

There are several reasons why the income verification system was pushed back to 2015; one of the biggest is that it would be financially unfeasible to do an audit on every one of the millions of applicants for health care. As of now, the government will be implementing an honor system when collecting data, which has actually been done many times before in the recent years; and if people lied on their applications and got caught, then they could face a penalty that could go up to $25,000 (plus the difference of what they should be paying) which they need to pay for when they declare on their tax returns next year.

The government is still figuring out which of the regulations for verification need a bit more work, and which of them they could use right now; this process can be pretty tricky and time-consuming especially now because resources are kind of low. The current system may seem messy, because there is virtually no way to detect fraud when using an honor system, but the government is working on finding viable shortcuts that can make the system work.

This minor setback does not mean that the Affordable Care Act and health insurance marketplaces will not get implemented next year, it only means that they will be taking a slightly different approach.

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