Kevin Pace is a jazz musician who teaches music appreciation in Northern Virginia. When the IRS announced it would impose the Affordable Care Act’s employer mandate here in the Old Dominion, Pace’s employer cut hours for part-time professors in order to avoid steep penalties. Pace lost $8,000 in income. That would be bad enough if the penalties the IRS is now imposing on Virginia employers were legal. Yet two federal courts have held they are not.
In King v. Burwell, four Virginia taxpayers are challenging the IRS’s decision to impose Obamacare’s major taxing and spending provisions in states that refused to establish a health-insurance “exchange.” As provided in the Affordable Care Act, the federal government established fallback exchanges (HealthCare.gov) in those states.
But the act authorizes premium subsidies — and certain taxes that those subsidies trigger — only “through an Exchange established by the State.” In spite of that clear statutory requirement, the IRS is issuing premium subsidies and imposing those taxes in 34 states, including Virginia, that did not establish exchanges. The King challengers allege the IRS is subjecting them, Kevin Pace and 57 million other Americans to illegal taxes in the form of Obamacare’s individual and employer mandates. The Supreme Court heard oral arguments earlier this month, and will likely rule by June.
Times-Dispatch columnist A. Barton Hinkle’s “The case against Obamacare is looking weaker,” March 23 — is skeptical of the challengers’ claim that Congress intended to authorize the disputed taxes and spending only in states that established exchanges. I used to share his skepticism. I no longer do.
When the Supreme Court drops its big ObamaCare ruling this summer, Republican leaders say they will be fully ready to step in — even if it won’t be the party’s official replacement plan.
“We have to be prepared, by the time the ruling comes, to have something. Not months later,” House Ways and Means Committee Chairman Paul Ryan (R-Wis.) told reporters this week.
Ryan said he plans to have a bill ready — and priced by the Congressional Budget Office — by late June when a ruling for King v. Burwell is expected. The GOP-backed case, which threatens to erase people’s subsidies in about three-quarters of states, has tremendously high stakes.
“There are going to be 37 states immediately impacted, or presumably impacted, and that’s something that deserves an immediate response,” Ryan told reporters.
He declined to provide details about the plan that he and other GOP chairmen are drafting, but said it would offer “freedom” and “more choices” for any ObamaCare customers who loses their subsidies. Until the ruling, he said King v. Burwell will be one of his top three agenda items.
More than a year after egregious security failures in the government’s healthcare website were exposed in congressional hearings, data remains compromised and the ill-fated site is still subject to cyberattacks and vulnerable to massive identity theft.
In fact, just this week Judicial Watch obtained documents from the government that show a possible mass breach of the privacy of innocent Americans involving the disastrous Obamacare website (Healthcare.gov). The records, from the U.S. Department of Health and Human Services (HHS), also reveal that top officials with the Centers for Medicare and Medicaid Services (CMS) knew of massive security risks with the healthcare website but chose to roll it out without resolving the problems.
When the Obamacare internet drama blew up in the administration’s face the Department of Homeland Security (DHS) was called to help clean up, according to the records recently made public by JW. Electronic mail exchanges between various DHS and CMS officials indicate that White House pressure to promote a “robust” digital Obamacare ad campaign allowed private information of Healthcare.gov users to be shared with advertisers. The email chain pushing this controversial use of citizen information includes a security expert’s assessment that security was an “afterthought” on the Obamacare website, that 70,000 Healthcare.gov records were easily viewed using Google and that the official in charge was fired for not signing off on the website’s security.
Breaking with normal tradition, we’re going to open this week’s update with national trends before moving into updates at the federal and state levels. This week there was an interesting report from the Kaiser Family Foundation that estimated that 50 percent of households receiving financial assistance to purchase private health insurance on the Marketplaces will have to return a portion of that subsidy when they file their tax returns as part of the tax credit reconciliation process. Repayments will, in most cases, be deducted from an enrollee’s refund check and the Kaiser report estimates that the average repayment will be $794. Roughly seven percent of enrollees could owe a repayment of between $2,000 and $5,000 and two percent could have to repay more than $5,000. A slightly smaller percentage of households, 45 percent, are estimated to receive additional money with their tax refund because they received underpayments in tax credits, with the average refund estimated to be $773. Kaiser’s report comes the same week as an unrelated but equally insightful analysis from Avalere found that for Open Enrollment 2 (OE2), ACA Marketplaces were primarily successful in enrolling lower-income persons eligible for subsidized coverage. The report found that as a person’s income went up, they were less likely to enroll in ACA coverage through a Marketplace, with only two percent of persons eligible for Marketplace coverage, but earning more than the amount to receive a subsidy, enrolled in a plan through a Marketplace.
With many Marketplaces and the Federally-facilitated Marketplace currently offering a Special Enrollment Period (SEP) for those currently uninsured who did not have health coverage in 2014 and are subject to the “shared responsibility payment” when they file their 2014 taxes, there have been few updates on how many eligible persons are taking advantage of this opportunity to gain coverage. However, over the weekend Mark Ciaramitaro, a vice president of health-care enrollment services at H&R Block, told the Wall Street Journal “that a significant percentage of taxpayers whose household members were not covered for at least a portion of 2014 are opting” to pay the penalty for not having coverage and not demonstrating an interest in signing up for 2015 coverage.
By Caitlin Owens
March 29, 2015 Taxes are unpopular. Obamacare is contentious. And the two in tandem promise to make for a political maelstrom, especially come April—when taxes are due and last-minute filers start to see their results.
This year’s deadline, however, is likely to be especially contentious. Last year, 2014—whose tax bills are now coming due—saw the implementation of the individual mandate, the part of the Affordable Care Act that (generally) requires people to have health insurance or pay a penalty.
With added unfamiliarity to an already complex process, filers whose returns are affected by Obamacare may be in for unexpected results, whether a surprise bill or a surprise refund.
As with any event associated with the health care law, rival spin machines will go into full effect, with Republicans highlighting horror stories while Democrats spotlight the law’s biggest beneficiaries. But the real-life impacts of the law are far more nuanced. Indeed, despite all talk of how much Obamacare would cost taxpayers, the reality is that a large percentage of the uninsured are exempt from penalties.