Q&A with Brandon Long
Provisions in Affordable Care Act in peril as court rulings conflict
Q: I understand there were two court decisions issued last week that could have major implications for the Affordable Care Act?
A: Yes, last week two federal appeals courts issued conflicting rulings on a major provision of the ACA regarding whether individuals can obtain tax credits for health coverage obtained on a federally-established ACA Exchange. On July 22, the U.S. Court of Appeals for the District of Columbia Circuit held that individuals cannot obtain tax credits for coverage bought on a federal exchange. That same day, the U.S. Court of Appeals for the Fourth Circuit resolved the same issue in a completely different way — and held that individuals can obtain tax credits for coverage purchased on a federal exchange.
Q: Why does this matter to Oklahoma employers?
A: The ACA provides that, effective Jan. 1, a large employer (generally one with 50 or more full-time employees) has a choice: either (a) offer certain coverage to its full-time employees, or (b) pay certain penalties. While the ACA uses the threat of penalties to induce large employers to provide their full-time employees with health coverage, these penalties only can be triggered if a full-time employee goes to an exchange, enrolls in coverage, and receives a tax credit. Currently, only 14 states have established exchanges. The federal government has established exchanges in the remaining 36 states including Oklahoma. If the decision issued by the United States Court of Appeals for the District of Columbia Circuit is correct, then tax credits are not available to individuals enrolling in coverage through an exchange established by the federal government. Thus, in states like Oklahoma where the federal government established the exchange, large employers couldn’t be subject to any employer-mandate penalties because such penalties depend on an individual receiving a tax credit. Similarly, an individual without coverage couldn’t be subject to the individual mandate penalty for the same reason.
Q: Any idea what is likely to happen next?
A: There’s no way to know for sure, but it seems likely that the entire U.S. Court of Appeals for the District of Columbia Circuit now will revisit that court’s decision to make sure that a majority of their appellate judges agree. The opinion issued last week was issued by three of the court’s judges and not the court as a whole. If the result of this next step is that the D.C. Circuit’s opinion stands as is, we’d then have a clear circuit split/disagreement, which is often what prompts the U.S. Supreme Court to look at and decide a difficult issue.
Q: What should Oklahoma employers do while the courts work through this issue?
A: Because the IRS takes the position that tax credits are available in states like Oklahoma where the federal government has established the exchange, Oklahoma employers should continue to work toward identifying their full-time employees as defined by the ACA and continue to develop strategies to offer those employees health coverage. At this point, it’s too risky to deviate from their current strategy.
PAULA BURKES, BUSINESS WRITER