Appeals court setback on Obamacare could curtail impending employer mandate
If a dealerês employee receives a preimum subsidy through the exchange, because the companyês insurance is too expensive, then the government may fine the dealer $3,000 for each employee for whom the situation applies. The DC Circuit Court of Appeals ruled that the government cannot give subsidies to individuals in states that are using a federal health care exchange instead of setting up a state exchange. Virginia is among 36 states that do not have their own health care exchange. Maryland and DC each set up their own health care exchanges.
One more twist: The state (or jurisdiction in the case of DC) where an individual applies for health insurance is based on the personês home zip code. That means, for example, if a dealership is based in Maryland, but the employee lives in Virginia, the DC courtês decision would apply. Conversely, if a dealership is based in Virginia, but the employee lives in DC or Maryland, the employer mandate would apply.
The Obama administration has said it will appeal the decision by the three-judge DC panel to the full court.
On the same day as the decision by the court in DC, the Fourth Circuit Court of Appeals in Richmond ruled that the subsidies could be given to individuals in states such as Virginia that use a federal exchange, so the employer mandate would still hold the opposite of the DC Appeals decision. Most legal experts think the case is bound for the U.S. Supreme Court early next year.
As has been the case for much of the bumpy roll out of the ACA, America will stay tuned in a wait and see posture on the employer mandate.
The much publicized decision about the Affordable Care Act by the U.S. Court of Appeals for the District of Columbia last week, could mean that employers in Virginia, along with employers in surrounding states with employees who live in Virginia, will no longer be penalized for failing to provide health insurance to their employees. The same holds true for states like Virginia, which opted not to create ACA state healthcare exchanges. This will only result, of course, if the DC Circuit decision stands after the legal challenge that is likely coming.
By way of background, the employer mandate section of the ACA provides that employers with 50 or more employees must offer health insurance to their employees. But if they offer it and it is too expensive for the employee more than 9.5 percent of the individualês income then the employee is eligible to get a preimum subsidy through the health care exchange. Currently, more than 85 percent of those buying insurance through the exchanges receive a federal subsidy to help pay for it.
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