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Thousands to Be Questioned on Eligibility for Health Insurance Subsidies

The Obama administration is contacting hundreds of thousands of people with subsidized health insurance to resolve questions about their eligibility, as consumer advocates express concern that many will be required to repay some or all of the subsidies.

Of the eight million people who signed up for private health plans through insurance exchanges under the new health care law, two million reported personal information that differed from data in government records, according to federal officials and Serco, the company hired to resolve such inconsistencies.

The government is asking consumers for additional documents to verify their income, citizenship, immigration status and Social Security numbers, as well as any health coverage that they may have from employers. People who do not provide the information risk losing their subsidized coverage and may have to repay subsidies next April.

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Federal subsidies for the purchase of private insurance are a cornerstone of the Affordable Care Act. More than eight out of 10 people who selected health plans through the exchanges from October through mid-April were eligible for subsidies, including income tax credits. So far this year the federal government has paid out $4.7 billion in subsidies, and the amount is expected to total $900 billion over 10 years.

Since June 1, the government has notified hundreds of thousands of people that "the information in your application doesn't match what we found in other records." Accordingly, the notice says, "you need to follow up as soon as possible and provide more documents to make sure the marketplace has the correct information."

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"If you don't send the needed documents," it says, "you risk losing your marketplace coverage or help you may be receiving to pay for such coverage."

The government has a long list of documents that consumers can use to establish their eligibility. These include copies of birth certificates, Social Security cards, high school diplomas, driver's licenses, pay stubs and voter registration cards.

"The law requires us to double- and triple-check this data," said Julie Bataille, a spokeswoman at the Centers for Medicare and Medicaid Services, so "we're reaching out to consumers — via mail, email and phone calls — to encourage them to provide supporting documentation."

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Mara Youdelman, a lawyer at the National Health Law Program, an advocacy group for low-income people, said: "In some cases, consumers say they already sent the documents to the federal marketplace. They don't understand why they are being asked to send them in again."

Even though consumers have sent documents to Serco's office in London, Ky., the government cannot always link the documents to applications for coverage filed months earlier. In addition, some consumers report persistent problems when they try to upload documents through HealthCare.gov.

For months, Republicans have asserted that the administration was lax in verifying the income and eligibility of people who applied for insurance subsidies.

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The government enrolled people "before the systems were in place to accurately confirm eligibility," said Representative Diane Black, Republican of Tennessee.

In some cases, the government told consumers that they had been found eligible for subsidized insurance and could enroll right away. But to keep the coverage, it said, they had to "send the marketplace more information" to verify their eligibility.

Representative Erik Paulsen, Republican of Minnesota, said "many Americans are going to find out that they owe money to the Internal Revenue Service because their premium tax credits were paid incorrectly."

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Representative Joseph Crowley, Democrat of New York, said such remarks showed the Republicans' "unending zeal to undermine the Affordable Care Act."

At the same time, supporters of the health care law worry that some of its chief beneficiaries will be upset if they find next spring that their tax liability is greater than they expected.

Ronald F. Pollack, the executive director of Families USA, a liberal-leaning consumer group, said he believed that the government would not find major discrepancies in the amounts most consumers should receive in premium tax credits. But he said, "We share concerns that the longer the process of verifying and resolving inconsistencies takes, the more some consumers will owe when they reconcile their tax returns."

The Congressional Budget Office estimates that subsidies this year will average $4,400 for each person who receives a subsidy. Federal law generally limits the amount that lower- and moderate-income people may be required to repay. A family of four with an annual income of $80,000 could be required to repay as much as $2,500.

Executives at Serco, the federal contractor, said that technical problems with HealthCare.gov had limited their ability to investigate discrepancies.

Until late May, a Serco executive said, the company had to rely on "manual processes" to resolve conflicts between information provided by consumers and information in government databases.

The government was supposed to develop a system to scan documents and transfer information automatically into electronic files, but the system was not developed, so Serco employees had to type in the information. Serco said it took an hour to perform tasks that were expected to take just five minutes.

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Subsidies depend on household income and the number of people in a family seeking assistance. But internal memorandums from the Department of Health and Human Services say that the insurance exchanges had no way to verify family size.

The government has also had difficulty checking information about employer-sponsored insurance. The Obama administration delayed until 2015 a requirement for employers to inform the government of insurance that they provide. Workers are generally ineligible for subsidies if they have access to affordable employer-sponsored coverage that meets basic federal standards.

—By Robert Pear, The New York Times

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