As the Trump administration and the Republican dominated Congress prepare to repeal and replace the Affordable Care Act, a new government report may give them further ammunition.

The report, from the Treasury Inspector General for Tax Administration, analyzed nonfilers for tax year 2014 who received Advance Premium Tax Credit, or APTC, payments. It found that the federal health insurance exchange and three state exchanges didn’t properly verify the identity and eligibility of many recipients of the tax credits.

The Affordable Care Act created the refundable Premium Tax Credit, or PTC, to help offset the cost of health insurance for people with low and moderate incomes. People who receive the tax credit in advance are required under the law to reconcile the amount paid on their behalf for health insurance coverage with the allowable amount of the tax credit on their tax returns. Senate Finance Committee chairman Orrin Hatch, R-Utah, asked TIGTA to examine the integrity checks performed on people who received APTC payments in 2014 and who have not yet filed their tax year 2014 returns to ensure they claimed eligibility under their true identities and qualified for the APTC.

Demonstrators outside the Supreme Court in advance of the court's rulling that the ACA was constitutional
Demonstrators outside the Supreme Court in advance of the court's rulling that the ACA was constitutional Bloomberg News

For the report, TIGTA examined 2014 application and enrollment data from the federal exchange and the California, New York and Vermont state exchanges. The four exchanges account for 261,872 of the 283,738 nonfilers (or about 92 percent) identified by TIGTA as of Dec. 31, 2015.

The report found the health insurance exchanges set up under the Affordable Care Act did not verify the identity or eligibility of many of the nonfilers. TIGTA’s analysis of the enrollment and application data for the 261,872 nonfilers found the exchanges did not successfully verify the identity of 35,276 individuals, or 13.5 percent. These individuals had more than $112 million in Advance Premium Tax Credits paid to insurers on their behalf during calendar year 2014.

In addition, the exchanges did not verify all the nonfilers’ eligibility to receive the tax credit. TIGTA’s review of 178,083 nonfilers whose identities were successfully verified found that 11,388 of them, or 6 percent, received $21.8 million worth of tax credits even though the data provided by the exchange indicated that one or more of the APTC eligibility requirements were not met. In addition, the exchanges did not verify one or more of the eligibility requirements, or the data TIGTA was provided were blank for 2,498 of the 178,083 nonfilers, or 1 percent of them. These nonfilers had $6.9 million in Advance Premium Tax Credits paid on their behalf.

TIGTA noted that concerns have been raised by both the Government Accountability Office and the Department of Health and Human Services’ Inspector General about the effectiveness of the verification processes on the exchanges.

In response to the report, Andrew Slavitt, acting administrator of the Centers for Medicare & Medicaid Services, pointed out that the majority of applicants are verified by the exchanges.

“Of the applicants initially identified by TIGTA as applying through the FFM [Federally Facilitated Marketplace], over 98 percent were reported as having their identity verified,” he wrote. “Upon further analysis of the remaining approximately two percent of applicants, CMS was able to verify that 67 percent of these consumers were identity proofed through the RIDP [remote identity proofing] service. An additional 26 percent of the consumers required applications through a channel that does not require the RIDP service, as they are proofed in other ways. CMS is in the process of further examining the remaining cases to determine if any of the applicants did not appropriately have their identity verified.”

Slavitt pointed out that CMS works with all the states to address the specific needs of their consumers while also meeting the requirements and responsibilities of the ACA.

“Moving forward, CMS remains committed to improving the performance and outcomes of State-based and Federally-facilitated Marketplaces as well as continuing to protect the integrity of taxpayer dollars,” he added.

Michael Cohn

Michael Cohn, editor-in-chief of, has been covering business and technology for a variety of publications since 1985.