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Poorly Phrased Reform Language May Jeopardize Subsidies

09/13/11

  04:58:05 pm, by MedBen5   , 230 words,  
Categories: News, Health Plan Management

Poorly Phrased Reform Language May Jeopardize Subsidies

Investor’s Business Daily spotlights a quirk in the Affordable Care Act that has the potential to cause headaches for people who buy health insurance through a federally-run exchange.

Beginning in 2014, individuals and families will be required to buy health insurance (assuming the Supreme Court doesn’t rule otherwise). For those who can’t get coverage through their employer, the government-created exchanges will serve as a “one-stop shop” to compare and purchase insurance. And should people need help paying the permium, taxpayer-funded subsidies will be available to those with incomes at 100% to 400% of the federal poverty level.

Here’s where the bugaboo comes in. Section 1311 of the ACA instructs state governments to set up their own exchanges – and if they don’t, Section 1321 says the federal government will do it for them. But the legislation also specifies that the tax credit is available to people who are enrolled in “an exchange established by the state under (Section) 1311.” So where does that leave people who enroll in the federally-run exchanges?

Fortunately, the government’s tax police are hot on the case. To remedy the error, the IRS has proposed a regulation that a taxpayer is eligible for the tax credit if he or a member of his family “is enrolled in one or more qualified health plans through an exchange established under Section 1311 or 1321.” Whether this is an overreach of their powers remains to be determined.

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