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IRS reports Results of the First Year Individual Responsibility Requirements of the Affordable Care Act

On Tuesday, the IRS announced the results of PPACA’s first year individual responsibility requirements. The report had analyzed 135 of an estimated 150 million tax returns. From this information, it became clear that 76% of Americans had checked the box indicating that they had qualifying insurance for the next year. About 12 million Americans had claimed an exemption from the individual mandate (for reasons such as being a Native American or hardship), while an additional 300,000 taxpayers qualified, but did not claim it. Those who did not take the exemption will be eligible to file an amended return over the next three years.

On the other hand, 7.5 million Americans opted to pay a penalty rather than purchase coverage. This was high above the administration’s expectations of only 3 to 6 million individuals. The average American paid $200 in penalties, and the country collected $1.5 billion total from these payments.

Additionally, the IRS released data on exactly how much was claimed in health insurance subsidies. 2.7 millions taxpayers in total claimed an average of $3,400, leading to more than $9 billion being claimed. However, 59% of these people had to pay money back because their annual income was more than what they had projected when originally claiming the subsidy. The average repayment came to about $800.

Within these tax returns though, a lot of fraud is/was present. A shocking 11 out of 12 phony applications for subsidized exchange-based coverage were automatically renewed. Senate Finance Committee Chairman Orrin Hatch has requested an audit on individuals who received subsidized coverage. Why the request? 700,000 individuals who didn’t file taxes were able to claim $2.4 billion in subsidies. He is calling for stronger integrity controls.

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