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How Poor Might Qualify For Obamacare Subsidies In States That Don't Expand Medicaid

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Still, some consumer advocates are skeptical that many people will use the approach.

"It's conceivable that some people may do this, but I think it will be pretty limited," said Tim Jost, a law professor at Washington and Lee University.

He added there is a gray area between overestimating one's income and intentionally lying to the government.

Catherine E. Livingston, a tax attorney with Jones Day in Washington, said "I think it would be quite challenging to prove they intentionally lied."

But even if people with incomes at the poverty level qualify for subsidies for private insurance, the coverage might still be unaffordable, said Laura Goodhue, executive director of the consumer advocacy group Florida CHAIN.

That's because they would owe as much as 2 percent of their income towards the cost of the premium and could still have co-pays and deductibles.  The health law does provide those under 250 percent of the poverty level with additional subsidies to lower these out-of-pocket costs.

Under regulations released in July, all the exchanges or marketplaces must first check the income level that an individual reports on his or her application against a federal database that contains data on the applicant's federal income tax returns as well as Social Security and current wage data.

But if an individual projects their income up to 10 percent higher than shown in electronically available data such as a prior tax return, there will be no questions asked. If there is more than a 10 percent discrepancy, the exchanges will ask for more information, such as a pay stub. If an applicant is unable to provide such data, the regulations allow the exchanges in 2014 to rely on the individual's "self-attestation" to determine the subsidy. This applies only when someone overestimates their income, according to a spokeswoman for Health and Human Services.

The reverse situation -- when someone underestimates their income to qualify for a larger subsidy -- would trigger requests for more documentation and in that case, the officials say they will rely on the electronic data.  If they did receive a larger subsidy than their income warranted, they would have to pay money back on their following year's taxes.

Several advocates who are involved in educating their communities about the new health insurance exchanges say they would not encourage people to do anything that might appear fraudulent.

"The population tends to worry more about getting in trouble with the IRS than worrying about not having health insurance," said Moriba Karamoko, director of the Louisiana Consumer Healthcare Coalition. Louisiana is not expanding Medicaid. "For me to suggest to anyone that they estimate to be higher when there is no reasonable expectation of that would be irresponsible, if not criminal."

Most said they were unaware that people below the poverty level who overestimate their income would not have to repay the subsidy if later found ineligible.

Thu, Aug 08 2013

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