The Honor System?

President Barack Obama's healthcare reform needs millions of people to enroll in coverage sold on the exchanges in their first year in order to work, spreading the financial risk among millions of consumers. It is feared many people, especially young healthy adults who stand to pay much higher premiums than they pay today, will opt out of coverage and pay the small penalty instead. 
  

The administration announced Friday, July 5th, that it would scale back verification rules on enrollees' income and health status.

Exchanges will not be required to verify consumer claims of eligibility for premium subsidies. The Obama administration announced that it would significantly scale back the health law's requirements that new insurance marketplaces verify consumers' income status. Instead, the federal government will rely more heavily on consumers' self-reported information until 2015, when it plans to have stronger verification systems in place.

This is being referred to as "The Honor System" and some accounts you've heard or read infer that no agency will check to see if applicants for premium subsidies are actually entitled to those tax credits. 

By relaxing the eligibility standards (if in fact it is legal to do so) this means that some individuals and families may be tempted to "fly under the radar" for a year and take advantage of premium subsidies to which they would not be entitled to under the law as written.

I caution everyone, consumers and insurance agents alike to remember the bureaucracy that is administering the ACA is The Internal Revenue Service. Keep in mind that the IRS has 15,000 new staffers to review tax returns and other records. Remember too that the IRS is in the news due to recent revelations of questionable behavior that may ruin the lives of countless law-abiding citizens. Do not mess with the IRS!  

Talk to an attorney before considering taking advantage of "The Honor System" regarding eligibility for government tax preferences. An authorized and ACA certified insurance professional can also give you advice and direction regarding this issue.