IRS Inspector General Says Obamacare Subsidies Susceptible to Fraud

The Internal Revenue Service (IRS) doesn't have a strategy to address fraud related to Obamacare's subsidies, according to a report by the tax agency's Inspector General (IG).

Under the law, individuals with incomes between 133 and 400 percent of the poverty line, or roughly $90,000 a year for a family of four, are eligible for tax credits and subsidies to offset the cost of private health insurance. Between 2012 and 2022, those subsidies are expected to cost taxpayers a total of about $808 billion, according to a March 2012 projection by the Congressional Budget Office.

But according to the IG report, dated September 2013 but released in a partially redacted version to the public this week, the IRS hasn't put in place the necessary checks to ensure that the the information technology systems that calculate and manage the subsidies aren't subject to fraud. "A fraud mitigation strategy is not in place to guide Affordable Care Act systems development, testing, initial deployment, and long-term operations," the report says. The tax agency's current protocols "do not address management's responsibility for managing, monitoring, and mitigating fraud risk with the development of new information systems for the ACA. Further, the ACA Program has not yet completed a fraud mitigation strategy to guide ongoing systems development."

“With the healthcare exchanges open for business, it is imperative that the IRS ensure the accuracy and completeness of Premium Tax Credit and Advanced Premium Tax Credit calculations," said Russell George, the tax administration inspector general, according to The Hill, "and ensure the security of information provided by taxpayers to the IRS and subsequently transmitted to other government entities."