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IRS Chief Tamps Down Concerns About Health Law and Tax Filing

By Melissa Attias, CQ Roll Call

September 10, 2014 -- Lawmakers from both parties have reiterated concern about how the health care law could complicate the upcoming tax filing season, even as the head of the Internal Revenue Service (IRS) emphasized that the vast majority of taxpayers next year will be narrowly affected.

IRS Commissioner John Koskinen told the House Ways and Means Health Subcommittee that 120 to 125 million of the 150 million anticipated filers of individual tax returns will check a box affirming they have health coverage. "That's all they'll have to do," he said.

The remainder, including individuals who received subsidies to buy insurance under the law (PL 111-148, PL 111-152), sought an exemption or are paying penalties for not having coverage, will have additional filing responsibilities, Koskinen noted.

California Democrat Mike Thompson expressed concern about the process for subsidy recipients and questioned whether it could be simplified with an extra checkbox. But Koskinen said the process is needed to reconcile subsidies paid in advance based on estimated income with what recipients are actually entitled to based on their actual earnings. 

Thompson also asked what the IRS is doing to educate people to update their income through the health insurance exchanges if they experience a change during the year. Koskinen said his agency has highlighted the issue in public releases, on its website, in YouTube videos and on social networks and has talked to tax preparers. He noted that updating income with the exchange during the year is not required, and the result is that any discrepancy will be smaller when the subsidy is reconciled during tax season.

More Funding

Koskinen also repeated calls for additional IRS funding in his opening remarks. He said the agency is expecting more calls next filing season from people looking for help sorting out health law requirements.

"We're concerned about our ability to meet this demand because of ongoing budget constraints," Koskinen said. The IRS could see even more calls if Congress passes tax extender legislation at the end of the year, he added, expressing hope that lawmakers would act quickly and make few changes.

The Obama administration requested money for the IRS to implement the tax-related provisions of the health law, but it was not funded, Koskinen said. The agency is moving funding away from other priorities to deliver on its responsibilities, he added, but the level of service could drop without the money requested for fiscal 2015 so that almost half of people who call the IRS are unable to reach a live assistant.

Oregon Democrat Earl Blumenauer urged Koskinen to continue to emphasize his agency's resource challenges. "We can't continue to cut the IRS budget, reduce staffing, make the code more complex, and then beat up on the IRS and still expect that we're going to keep the highest compliance rate in the world," he said.

Exchange Success Questioned

Beyond the tax process, Andy Slavitt, principal deputy administrator of the Centers for Medicare and Medicaid Services, faced questions about the health coverage numbers as a result of the 2010 law. Georgia Republican Tom Price asked how many of the 8 million enrolled through the federal and state insurance exchanges at the end of the first open enrollment period already had coverage, but Slavitt said he did not know.

Addressing reports that a hacker broke into the federal exchange website in July, Slavitt told Price his agency learned about the incident on Aug. 25 and that he thinks it notified federal authorities within approximately 10 days. Slavitt said insurers were informed at the same time and were unaffected, but Price maintained that insurers found out through the press.

Tennessee Republican Diane Black also asked about testing of the new auto-enrollment feature in the exchange, which Slavitt said he thinks is scheduled for October. He said open enrollment begins Nov. 15 and that people who are already enrolled but do not come back to the exchange will be automatically enrolled in their existing plan Dec. 15.

Speaking to reporters after the hearing, Slavitt said his agency rolled out a streamlined application process to navigators and the call center this week, and that the backend system for the exchange is still being worked on. He also said the agency is where he expected for testing the federal exchange website, noting that it has a lot more time than what was provided last year.

"We've left what I think is sufficient amount of time in the schedule," Slavitt said.

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