This is from John Merline at Investor's Business Daily:
Nearly half a million ObamaCare enrollees were able to claim more than $235 million in excess subsidies that they will never have to pay back, a recent IRS audit showed, thanks to a quirk in the law that leaves the program vulnerable to potentially billions in excess subsidy payments.
Because ObamaCare subsidies are based on income, enrollees have to guess about their income for the next year when they sign up, which the exchanges use to calculate the tax credits. Enrollees can then opt to take these credits in advance, in which case they're sent directly to insurers, who subtract them from the enrollees' monthly bills. That's called the "advanced payment tax credit" or APTC.
If an enrollee guesses wrong, they'll either get additional subsidy money when they file their taxes, or they'll have to pay some or all of their excess subsidy money back. But the law caps how much of the excess subsidy money must be returned for those making less than 400% of poverty. (Families at 400% or above are ineligible for any subsidies.) The caps range from $300 to $2,500, depending on income and filing status.
To illustrate how the caps work, consider a family of four that enrolled in ObamaCare and guessed their income would be $40,000. That family would receive a subsidy of $7,980 for the year, according to a Kaiser Family Foundation subsidy calculator....
If it turns out that the family actually made $95,000, their subsidy should have been just $828, and they'd technically owe the difference — $7,152 — back to the government.
But because their actual income was less than 400% of poverty, the most they'll have to pay back is $2,500.
In other words, by underestimating their income, this family was able to leverage $4,645 in excess ObamaCare subsidies....
