IRS Breaks Law Under the ACA

As mentioned in a previous post this month, the D.C. Circuit Court was looking at the Halbig v. Burwell case which looks into the issue of whether premium subsidies should be authorized on the federal exchange in states where the government set up the insurance marketplace. The court has now made a decision.

What’s the verdict?

The court has ruled that “an exchange established by the State means an exchange established by the State.” Therefore, according to the language in the Affordable Care Act, the government cannot legally give premium subsidies to states that did not develop their own state run exchange. However, individuals and families enrolled in Obamacare have been receiving federal subsidy premiums both from state run exchanges and from states where the government set up their exchange.

What am I missing?

The ACA was intentionally written in a way to entice lawmakers and governors to set up their own state run insurance marketplace. Jonathon Gruber is one of the experts in Obamacare and helped write the law. It was purposefully written so that states would understand that if they didn’t set up their own exchanges, there would be billions of dollars at stake and their constituents would not receive benefits like subsidies.

What happened next?

The advocates of the ACA did not predict that the law would be so unpopular among so many Americans and that nearly 40 states would revolt against the government and refuse to establish their own insurance marketplace. Now, the White House has attempted to protect the Democratic lawmakers by ignoring this main clause in the ACA. They have ignored the wording stating that the federal government will not give premium subsidies to states that do not set up their own exchange in order to protect the millions of Americans that would not receive subsidies. The IRS has been ignoring and breaking the law by giving premium subsidies to states without their own exchanges.

How does this affect you?

The legal review of the ACA may now go to the Supreme Court. The IRS has not complied with the law and people received premiums and tax credits even though they legally were not entitled to them. Thus, these individuals and families may lose those premiums and tax credits and be forced to pay more for health coverage.

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