The Obama administration “misled” Americans into thinking signing up for Obamacare would be cheaper than it really was, according to an inspector general’s report Thursday that said the IRS dramatically understated the actual cost of enrolling.
IRS officials sent the letters to try to prod Americans to comply with the 2010 health law’s “individual mandate” that penalizes them for not holding coverage.
But as part of the letters, the IRS said most people could find plans for $75 a month or less once government subsidies were figured in.
That was untrue — in fact, the average cost was more than twice that figure, at $168 a month, the Treasury Inspector General for Tax Administration said.
“Many of the nearly 7.5 million taxpayers who receive letters and seek insurance may feel misled if the actual cost of their insurance is much higher than the $75 per month detailed in their notification letter,” the inspector general concluded.
The IRS said it was only using numbers provided by Department of Health and Human Services and verified by the Treasury Department. They said the $75 figure was true for some taxpayers.
The inspector general said it asked for that documentation but never received it.
Auditors said their own analysis found the HHS studies were based on a smaller sample and was limited to those who chose lower-coverage plans with fewer benefits.
According to the new audit, federal regulations require agencies to present accurate information.
Investigators uncovered the misleading information as part of a broader audit about how the IRS was handling its role in alerting Americans who aren’t complying with Obamacare’s mandate to hold insurance.
Some 19.3 million Americans ducked the Obamacare mandate in 2016, with 12.8 million claiming an exemption and 6.5 million paying the tax penalty.
The IRS was supposed to begin sending letters in June 2015 to encourage those who ducked the mandate to sign up, but the agency declined, saying it wanted to instead study behavior from Obamacare’s first full year of operations in 2014.
The agency also missed the deadline in 2016, but did send notices beginning at the end of the year.
Officials said they figured they’d get better reception if they sent them close to the time of enrollment for 2017.
Some 7.5 million letters were sent — about half in English and half in Spanish.
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