Credit Reporting Agency Hired to Verify Incomes for Insurance Subsidies
WASHINGTON — The Obama administration has hired a credit reporting agency to help verify the incomes of people who apply for federal subsidies to buy insurance under the new health care law.
Senator Orrin G. Hatch, a Finance Committee member.
The company, Equifax Workforce Solutions, a unit of Equifax Inc., will provide information that is more current than what is available on federal income tax returns.
The use of a commercial information vendor comes as Congressional Republicans are expressing concern about the administration’s ability to verify data in subsidy applications. Subsidies, in the form of tax credits, will be available to millions of low- and moderate-income people who are not eligible for Medicaid and have not been offered affordable coverage by employers.
The White House announced on July 2 that it was delaying until 2015 a major provision of the health care law that requires larger employers to offer health coverage to employees and to report such coverage to the Internal Revenue Service. The subsidies, averaging more than $5,000 a year per person, will be available through marketplaces, or exchanges, where consumers in every state can shop for insurance, starting Oct. 1.
Under rules published Monday in the Federal Register, an exchange may, in some cases, rely on what consumers say about their income and employer-sponsored coverage if such information cannot be obtained from employers or other sources.
Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee, said it was “little more than an honor system for billions of dollars of premium subsidies.”
Federal officials said they would rely on Equifax — a company widely used by mortgage lenders, social service agencies and others — to verify income and employment and could extend the initial 12-month contract, bringing its potential value to $329.4 million over five years.
Contract documents show that Equifax must provide income information “in real time,” usually within a second of receiving a query from the federal government. Equifax says much of its information comes from data that is provided by employers and updated each payroll period.
Under the contract, Equifax can use sources like credit card applications but must develop a plan to indicate the accuracy of data and to reduce the risk of fraud.
Meredith Griffanti, a spokeswoman for Equifax, said the company was working with federal officials to “help ensure that consumers get the health care and tax credits they are entitled to.”
“Beginning in October,” she said, “the government will activate a Web exchange that will allow consumers to enter their employment and income information, have it verified and receive alerts if they are qualified for Medicaid or health care tax credits.”
Equifax is also supposed to find a way to provide information about whether people have employer-sponsored coverage and how much they pay for it.
Ms. Griffanti said that Equifax Workforce Solutions, formerly known as the TALX Corporation, did not maintain information on employee benefits, like health benefits.
Federal officials moved Tuesday to tamp down concern about another company playing a major role in President Obama’s health care overhaul. The company, Serco, will help officials sift applications for health insurance and tax credits under the health care law.
The American unit of the Serco Group won a contract worth as much as $1.2 billion on June 27 to provide “eligibility support services” to health insurance exchanges around the country.
On July 11, the British government announced that it was reviewing all contracts with Serco, one of its biggest and most important suppliers, after auditors found that the company had overcharged taxpayers for the electronic monitoring of prisoners who had been released. The justice secretary, Chris Grayling, told Parliament that the overcharging had begun at least eight years ago.
Brian T. Cook, a spokesman for the Centers for Medicare and Medicaid Services, which awarded the federal contract, expressed confidence in the company. Operations of Serco’s American subsidiary are separate from those of the parent company, based in Britain, administration officials said.
Alan Hill, a spokesman for Serco’s American unit, in Reston, Va., said, “There is no reason that this issue will have any impact on the capabilities or operations of Serco’s U.S. business.”