Michel River’s application for an Obamacare insurance plan ran smoothly. He signed up with an agent in November, submitted supporting income documents and started paying his monthly premium of $48.
That’s why he was surprised a few months later when his health insurer, Molina Healthcare of Florida, charged him $536 — the full cost of one month of insurance without the tax credits that made his plan affordable.
The reason? A problem processing paperwork that sometimes results in the government cutting off tax credits when there are inconsistencies in documentation, especially when it comes to income estimates. The problems are affecting thousands of consumers around the country, say enrollment agents and healthcare counselors, including some in South Florida — where more people signed up for insurance plans under the Affordable Care Act than in 47 entire states.
The issue isn’t new. A U.S. Department of Health and Human Services report from the Office of the Inspector General said that between October and December of 2013, the federal marketplaces were unable to resolve 2.6 million data inconsistencies, which occur when the marketplace can’t cross-check applicant information with other data.
The report found that the federal marketplace “was unable to resolve inconsistencies even if applicants submitted appropriate documentation” and noted that “an inconsistency does not necessarily indicate that an applicant provided inaccurate information.” When the report was published last summer, the Centers for Medicare and Medicaid Services said it was working toward swifter resolutions.
Eventually, 97,000 of the households with income inconsistencies either lost their tax credits or had them adjusted for 2014 coverage.
The paperwork processing problem, however, persists.
In 2015, the number of consumers who had their tax credits adjusted or lost due to an income inconsistency rose as enrollment went up. According to a recent report from CMS, 223,000 households had their tax credit or cost-sharing reductions adjusted for their 2015 coverage.
HHS could not say how many consumers overall saw their tax credits revoked because of an inconsistency in their documents, nor could it say what percentage of those people turned out to have been wrongly denied subsidies.
The issue with income projections
The problems frequently seem to start with the income projection portion of the Obamacare application.
When consumers enroll in an ACA plan, they are asked to estimate their income for the coming year. They may also have to provide supporting documentation, such as tax returns and pay stubs. The income estimate is used to determine the amount of tax credits — financial assistance to lower the monthly cost of insurance — a person will receive.
But when the marketplace asks for supporting documentation, its notices are leaving consumers confused, said Judy Solomon, vice president of health policy at the Center on Budget and Policy Priorities.
"There’s a difficult communication so that people are not always clear what is happening in their case and what they need to send," Solomon said.
The notices list possible documents a consumer can submit to resolve their inconsistency, but is unclear which specific documents are needed. Consumers may send in a document on the list that fails to resolve the issue, and get the same notice again, Solomon said. The cycle may lead consumers to believe the documents weren’t received, not understanding that they didn’t sent the correct document.
When the tax credits are slashed, they wonder what went wrong — particularly when they thought they had supplied the needed paperwork, as in River’s case.
The Miami computer technician, 42, who said he is generally healthy, only signed up for coverage because it is required by law: “If you are going to force someone to do it, be on top of it. Do your job right. Everyone has bills and $536 is a lot.”
When he learned there was an inconsistency in his data, he said he and his agent called the marketplace in March, explained that the documents were uploaded at the time of enrollment, and that he never received notices that he needed to provide more information — or lose the credits.
HHS said it attempts to contact consumers at least four times and as many as nine or 10 times through email or phone about data inconsistencies.
River filed an appeal with the marketplace and is hoping for reimbursement.
Ammer Cabrera, an agent with Sunshine Life and Health Advisors, one of the largest enrollment agencies in the Miami-Dade county area, said the issue has become an “epidemic.”
At least 10 percent of about 100,000 people the agency says it enrolled for 2015 have returned to the Sunshine offices trying to regain their tax credits after document issues stripped them away, Cabrera said.
“This year, they’ve been cutthroat with paperwork,” Cabrera said. “Now you go from paying $25 to $325. For a lot of people, that’s what they make. That’s like half their salary.”
Juanita Mainster, an enrollment counselor with the Epilepsy Foundation, the second largest enrollment group in the state, said documents she sent through certified mail were still reported missing by the marketplace.
“There are instances where the marketplace will tell us that, ‘No, the consumer has not submitted anything,’ when the consumer is sitting here with return receipts of registered certified mail,” Mainster said.
She said she has also seen consumers cause their own problems through misinformation or forgetting to check their marketplace account.
Yudisey Medina, a Miami business owner, said that when her premium rose from $21 to $265 after her tax credits were revoked, she considered canceling her coverage.
“I preferred to cancel my Obamacare, even if I was going to get the penalty,” said Medina, 36, who had replied to letters from the marketplace to prove her income with supporting documents. “I was overwhelmed.”
Medina moved to Miami from Spain about a year and a half ago, so she did not have enough income information filed with the Internal Revenue Service when the marketplace attempted to verify her income.
The tax data used to verify income is about two years old, according to the OIG report.
Solomon of the Center on Budget and Policy Priorities said the marketplace eligibility process was meant to be supported by information from other sources — which is often dated.
“This was designed to be very much an automated process but it really can’t be, because people's situations are so complicated and so different,” Solomon said. “If we think about people who have stable incomes this works, but that’s not really the folks that we are talking about."
River, a contract worker, said his income fluctuates, making it tough to project.
“You don’t believe me because last year I might have had a better year and you’re going to take my tax credit?” asked River.
But HHS said it also has to watch out for people trying to dupe the system. And the agency insists it has made strides to eliminate some of the issues.
“We’ve worked hard to improve our processes so that data-matching issues are resolved quickly and easily, and conducted large outreach campaigns to inform consumers of their responsibility for providing supporting documentation to verify their eligibility information,” HHS said in a statement.
Consumers who lost their tax credits will likely get them back in their tax returns — if they can wait that long. The U.S. Department of Treasury said Tuesday consumers may get a larger tax refund if their subsidies were too low.
Meantime, the paperwork issues continue to cause more confusion.
“I think it will continue to be a significant problem until they can do a better job of explaining to people what they need to do,” Solomon said.
Follow @MHhealth for health news from South Florida and around the nation. This story was produced in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.