On tax deadline day, April 15, IRS Commissioner John Koskinen testified before my committee about the IRS’ implementation of Obamacare.
The IRS, probably the most feared civilian agency of the federal government, plays a central role in enforcing Obamacare’s individual mandate and in reconciling its subsidies. So, as chairman of the Homeland Security and Governmental Affairs Committee, I felt Koskinen (right) needed to hear what Americans have experienced.
Reports suggest that it hasn’t gone smoothly. One found that the IRS delayed refunds for “tens of thousands” of enrollees because of missing data from state-run health insurance exchanges. National Taxpayer Advocate Nina Olson said the refunds have been “held for quite a long time, since the beginning of the filing season.” Olson said that IRS employees were instructed not to tell callers why their refunds are suspended.
I read Mr. Koskinen a letter my office received from a Wisconsin couple detailing their experience with Obamacare. When filing their taxes, they learned that they will have to repay the government $11,550 that the government incorrectly used to subsidize the coverage the couple was forced to buy on the federally run exchange. The sum equals more than 18% of the couple’s income, the letter said.
“A $11,550 penalty on an annual income of approximately $60,000 for two people seems excessive,” the couple wrote, adding that they did “exactly what we were told” by the Obamacare exchange. Now, they fear they will have to raid their retirement fund to pay back what the government incorrectly calculated.
Mr. Koskinen later offered what I am sure he felt was comforting news. “You can do an online installment agreement that will allow you to spread those payments over time,” he said, so taxpayers “don’t have to immediately take draconian steps.” The IRS will charge them interest, he said, but rates now are “very low.”
That may seem accommodating to the IRS, but think about how people would end up in such a situation. Many people will unexpectedly end up owing the government money because Obamacare caused them to lose the coverage they had, forcing them to buy costly coverage through government-run exchanges that worked poorly. The government sent money to insurers on their behalf – money that, the fine print now says, they had to very carefully calibrate or they will unexpectedly have to pay the government.
If you buy coverage through an Obamacare exchange, you are required to estimate your income for next year. If you underestimate for any reason, you may be on a very costly hook.
But at least the government won’t charge you much interest for its costly error. How very generous.
Photo Credit: AP Photo/Andrew Harnik