Senate report: Illegal immigrants benefited from up to $750M in ObamaCare subsidies

Oct. 27, 2012: A Tea Party member reaches for a pamphlet titled "The Impact of Obamacare", at a "Food for Free Minds Tea Party Rally" in Littleton, New Hampshire . (Reuters)

Illegal immigrants and individuals with unclear legal status wrongly benefited from up to $750 million in ObamaCare subsidies and the government is struggling to recoup the money, according to a new Senate report obtained by Fox News.

The report, produced by Republicans on the Senate Homeland Security and Governmental Affairs Committee, examined Affordable Care Act tax credits meant to defray the cost of insurance premiums. It found that as of June 2015, “the Administration awarded approximately $750 million in tax credits on behalf of individuals who were later determined to be ineligible because they failed to verify their citizenship, status as a national, or legal presence.”

The review found the credits went to more than 500,000 people – who are illegal immigrants or whose legal status was unclear due to insufficient records.

The Centers for Medicare and Medicaid Services confirmed to FoxNews.com on Monday that 471,000 customers with 2015 coverage failed to produce proper documentation on their citizenship or immigration status on time – but stressed that this does not necessarily mean they’re ineligible.

“Lack of verification does not mean an individual is ineligible for financial assistance, but only that a Marketplace did not receive sufficient information to verify eligibility in the time period outlined in the law,” CMS spokesman Aaron Albright said.

The Senate report also accused the administration of lacking a solid plan to get that money back – and predicted that in the end, the IRS will be “unable to fully recoup the funds.”

“The information provided to the Committee by the IRS and HHS reveals a troubling lack of coordination between the two agencies ... and demonstrates that the IRS and HHS neglected to consider how they would recover these wasteful payments,” the report says.

Under the law, the feds can dole out these payments on a temporary basis if a recipient’s legal status is unclear, but are supposed to cut off funding and coverage if the recipient does not later come up with the paperwork. Up to a half-million “ineligible” people, according to the report, applied in this way -- with their credits paid in advance to the insurers. The IRS, though, is supposed to get overpayments back from the individuals themselves.

The Senate report, based on a review launched by committee Chairman Sen. Ron Johnson, R-Wis., derisively describes this approach as “pay and chase.”

In other words, the Centers for Medicare and Medicaid Services pays credits and subsidies to the insurance companies on behalf of the applicants – and the feds then “chase” after any overpayments to ineligible people once they are discovered.

“This ‘pay and chase’ model has potentially cost taxpayers approximately $750 million,” the report says. The 500,000 individuals in question have been removed from coverage, according to the findings, as the government seeks to get the money back.

The Senate report says the IRS and HHS initially failed to coordinate on a plan for recouping funds, and claimed that a subsequent plan from the IRS to recoup the money is still “ineffective and insufficient.”

In a July letter to Johnson, IRS Commissioner John Koskinen assured that the agency is “committed to identifying and efficiently addressing” improper payments. He reiterated that anyone “not lawfully present” who enrolls for ObamaCare coverage “must repay” the advance premium credit payments, and would be breaking the law if they don’t.

Fox News’ Chad Pergram and FoxNews.com’s Judson Berger contributed to this report.