Here comes another legal challenge to Obamacare: On Thursday, a group of small business owners and individuals in six states sued the federal government over an IRS regulation that they say goes beyond the “plain language” of the Affordable Care Act (ACA).
In a nutshell, the plaintiffs argue that federal subsidies intended to help lower-income people afford insurance are going to states that should not get them.
The way the Affordable Care Act is written, states that refuse to set up their own health care exchanges are not eligible for the federal premium subsidies.
But the IRS rule says lower-income people living in those states will get federal subsidies to help them pay for their insurance premiums — even though the Affordable Care Act’s statutory language limits those subsidies to exchanges established by the states.
The lawsuit says because of the IRS rule that illegally expands federal subsidies to all states, the plaintiffs “will be forced to either purchase or sponsor specific insurance that they otherwise would not purchase or sponsor, or expose themselves to financial penalties.”
Bottom line: The plaintiffs want nothing to do with Obamacare, and they say the availability of federal subsidies will force them into it — or penalize them for avoiding it.
Here’s the background: To encourage states to establish their own health insurance exchanges, Congress offered low- and moderate- income residents premium assistance – in the form of refundable tax credits — to help them buy insurance on state health exchanges.
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