Phony ACA Applicants had no Tax Returns

Published On: 17th July 2015


In 2014, investigators signed up phony applicants for coverage under the Affordable Care Act. Although these were fake accounts, they were re-enrolled for 2015, despite the fact no income tax returns were filed for those accounts. In addition to being re-enrolled, they also received larger taxpayer subsidies for the insurance premiums.

The Government Accountability Office, a nonpartisan entity, said that 11 fake names with fake information were created last year to check the integrity of the system. Each was enrolled via healthcare.gov. Some of them even had “unresolved documentation issues,” but were able to keep the coverage that they had.

Six of the accounts were flagged and termination notices were sent, but five of them were reinstated simply by calling the customer service center. This indicates that there is a breakdown in the system.

The five accounts that were reinstated also received a bump in their subsidies, although there was no request to do so.

It was stated that the document-processing contractor for HealthCare.gov is a contractor that is not considered a fraud expert, so they are to not engage in anti-fraud activities. Fraud detection was never a requirement for the document processor.

Officials within the administration also stated that there has been no indication of this type of fraud within the system, so they have no concern that fake counts could be an issue.

Some contend that there could be an issue. Although it is not believed it would be a major problem, there have been cases where individuals under the Medicaid system have tried to get benefits for non-existent children or deceased family members for one reason or another. There is also the case of identity theft or individuals creating fake identities for themselves. This is despite the fact that the subsidies do not go into the bank accounts of the enrollees, but go directly toward the insurance company.

The fact that phony accounts can be enrolled has also raised question as to the true number of individuals enrolled in the program. This has resulted in a call to strengthen the verification checks, especially since a person can enroll without having a tax return on file.

Tax returns are important when enrolling because the subsidies are income-based. The tax return is an important tool in determining a person’s income. Tax returns are the primary way in which the government is to check the applicants.

When the fake enrollees received correspondence, it was not clear as to what the problems were with the applications. Rather than the letters directly what the issues were, they simply stated that there was something wrong. What this does for an applicant is it causes them to have to review all details rather than go directly to the detail that is causing the problem. This creates more work for applicants. When the fake enrollees were instructed to submit documentation that proves identity and citizenship, the document list included income verification documents rather than identity verification documents.

Currently, 10 million people are enrolled in coverage under the ACA.