Companies Could Challenge ObamaCare Employer Fines By David Hogberg, Investor's Business Daily
Posted 09/16/2011 05:46 PM ET
Another ObamaCare glitch could result in some businesses being exempt from fines for not providing their workers with health insurance.
A company would have to challenge the fine in court. But if one does, that could eliminate employer penalties in many states and make residents in those areas ineligible for premium tax credits.
Under ObamaCare, a company with 50 or more employees faces a $2,000 annual fine per employee if it does not provide insurance. But it's only fined if one of its employees applies and qualifies for a premium tax credit via a health insurance exchange.
ObamaCare instructs state governments to set up exchanges where individuals shop and buy health insurance. Several states, including Florida and Texas, have said they will not. Many others may not set them up in time.
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"Because of Internal Revenue Service regulations, a company is liable if one of its employees received a tax credit through a federally run exchange," said James Blumstein, professor at Vanderbilt Law School. "The company could challenge the fine on the grounds that the employee had received the tax credit in error."
That's because the ObamaCare provision that imposes the fine defines the tax credit as "any premium tax credit allowed under section 36B." Section 36B states that the credit is available to people who are enrolled in an "an exchange established by (a) state" government. A strict reading suggests people in federal exchanges are ineligible for the tax credit.
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