As state-run Obamacare exchanges are shuttering their doors seemingly every week (more than half of the co-ops have now collapsed), the president's "signature legislation" faces another crippling reality: hundreds of thousands of subsidy recipients failed to file a tax return this year and thus will not be allowed to receive subsidies for 2016.
According to the IRS in July, about 710,000 Obamacare subsidy recipients failed to submit their 2014 tax returns and did not file for an extension. Without the tax return, the federal government can't confirm that the enrollee was actually eligible for the benefit received in advance. The result: no subsidy next year, which will likely result in many of current enrollees being unable to afford health insurance, which, thanks to the law, is now required by law to purchase.
The New York Times provides some of the devastating numbers in this latest Obamacare trainwreck:
In July, the Internal Revenue Service said 710,000 people who had received subsidies under the Affordable Care Act had not filed tax returns and had not requested more time to do so.
If those people do not return to the marketplace this fall, they may be automatically re-enrolled in the same or similar health plans at full price. And when they receive an invoice from the insurance company next year, they may be shocked to see that their subsidies have been cut to zero.
The I.R.S. also said 760,000 taxpayers had received subsidies and filed returns but had not attached the required form comparing the subsidies paid with the amount they were entitled to receive. Taxpayers describe that document, I.R.S. Form 8962, as daunting.
The massive filing fail comes despite the IRS sending out letters to over a million people this summer telling subsidy recipients that if they didn't file their 2014 return they'll "be responsible for the full cost of your monthly premiums and all covered services” in 2016 and they may be forced to repay 2015 subsidies. The administration is currently scrambling to provide additional resources and manpower to keep those who failed to do what they were required to do by law on the president’s healthcare plan.
"If those people do not return to the marketplace this fall, they may be automatically re-enrolled in the same or similar health plans at full price."
The New York Times
The news follows more announcements of state exchanges collapsing after falling into the so-called "death spiral" from low enrollments. A few weeks ago the Colorado Obamacare co-op abruptly announced that it was shutting down, leaving around 80,000 Colorado residents in need of a new plan next year. Colorado is the 7th state exchange to fail, the announcement coming only days after Tennessee and Kentucky revealed that they were getting out of the Obamacare business. In June, Hawaii gave up on its exchange after blowing $130 million in taxpayer funds in two years and failing to enroll a single person in the second year. None of the exchange horror stories, however, surpass Oregon, which burned through $300 million and never managed to enroll one person online. Only 16 of the original 23 exchanges remain in operation.