Only in Washington, only in Washington can you let people take more than what’s legally allowed under a government program, and at the same time, let them keep it.
Last year, I shined a light with the Treasury Inspector General that over 40 percent of excess federal marketplace subsidy payments, totaling $10.2 billion dating back to 2016, were not being recouped.
So, why not recoup?
Because of the current so-called “safe harbor” recapture rules.
When Obamacare was passed, it established so-called “safe harbor” recapture rules for the Advanced Premium Tax Credit (APTC), also known as a subsidy.
When an individual buys a health plan off of the federal marketplace, the government subsidizes much of the cost through an advanced premium tax credit.
The subsidy is based on a consumer’s estimated income.
At the end of the year, the consumer reconciles any differences in their subsidy amount based on their actual income, compared to their previously projected income.
If a consumer gets more than what’s permitted based on their income, they must return the excess amount unless they fall within the so-called “safe harbor,” which is based on income and excess amount.
A consumer could misestimate their annual income and not be required to pay back any excess subsidy, or maybe just a small portion.
Until now, “safe harbor” rules permitted keeping up to $3,250 in excess.
This policy actually rewarded fraud and wasted taxpayers’ money.
This is especially concerning since I’ve also found that insurance agents are also using targeted internet ads to fraudulently enroll consumers with false income.
Congress has tightened and simplified these “safe harbor” rules before.
Senate Republicans through the One Big Beautiful Bill ended this legal theft for those over the poverty limits.
This policy will save over $19 billion in the next 10 years.
Senate Republicans also established pre-enrollment verification requirements with flexibilities for special enrollment periods.
This will save over $40 billion.
This is good news for the taxpayers, but particularly fairness in this program.
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