Oops! No ObamaCare Tax Credit for You!
The Affordable Care Act (ACA) contains provisions to establish health insurance exchanges by 2014 for individuals and families who lack access to health coverage through their employer. Those with incomes above 133% of the poverty level (about $30,000 for a family of four) will receive generous subsidies that phase out as their incomes reaches 400% (around $90,000). But there was a mistake made when the law was hurriedly written: the ACA subsidizes coverage only in state-based exchanges, not in a federal exchange. This is from Investor’s Business Daily:
Section 1311 of ObamaCare instructs state governments to set up an exchange. If a state refuses, Section 1321 lets the federal government establish an exchange in the state.
Yet ObamaCare states that the tax credit is available to people who are enrolled in an “an exchange established by the state under (Section) 1311.” It makes no mention of people enrolled in federal exchanges being eligible for the tax credit.
This could be a big problem, as some states probably won’t set up and run exchanges. Governors in Alaska, Florida, Louisiana and Texas have said they won’t. Kansas and Oklahoma have also signaled they won’t by returning federal funds meant to be used to establish an exchange. Other states seem to be dragging their feet.
around $90,000!
Don’t they know that you cannot subsidize above the median income. If you try you end up robbing Peter to pay Peter. I guess if the tax is hidden as many are Peter will say thank you.
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If this interpretation is upheld in the courts, I’m afraid most of the foot dragging will ultimately stop. It would cause a political firestorm for governors who refuse to set up exchanges that provide generous subsidies — forcing consumers to pay unsubsidized premiums in a federal exchange.