Indiana challenge to Obamacare tax-credit rule can go forward

Back to TopCommentsE-mailPrintBookmark and Share

Indiana can challenge an Internal Revenue Service rule making people who sign up for health-care coverage under the Affordable Care Act through federal government-created insurance exchanges eligible for a tax credit.

U.S. District Judge William T. Lawrence in Indianapolis on Tuesday denied an IRS bid to dismiss that portion of the state’s 2013 lawsuit, in which it claimed the rule illegally conflicts with a provision of the federal law limiting those tax credits to enrollees in state-created exchanges.

Lawrence’s ruling comes three weeks after U.S. appeals courts in Washington, D.C., and in Richmond, Virginia, reached conflicting conclusions about availability of the subsidy for which about 4.5 million people have qualified. Indiana was one of the states that opted to not create an exchange.

In a 2-1 ruling in which the majority’s judges were appointed by Republican presidents, the Washington court deemed the IRS provision invalid, saying Congress authorized the subsidies only for state-exchange enrollees.

A three-judge panel comprised of Democratic nominees in Richmond later that day said while the law’s language is ambiguous, the IRS had discretion in writing rules that implemented President Barack Obama’s 2010 health care reform legislation.

Neither decision has direct bearing on Indiana, which falls under the jurisdiction of the U.S. Court of Appeals in Chicago.

School districts

Lawrence, in his ruling, rejected U.S. contentions that Indiana and the 39 state public schools systems that joined it in the suit would suffer no harm from the rule.

Still, the 2008 nominee of President George W. Bush threw out the state’s claim that it may be compelled to comply with the coverage mandate even as Obama delayed that requirement to 2015.

The judge also rejected Indiana’s contention the mandate violated its sovereignty, ruling it, and 25 other states, lost that argument in the early stages of a 2010 Obamacare challenge that ended with the U.S. Supreme Court upholding the legislation as a valid exercise of Congress’s taxing authority.

Lawrence didn’t reach a final conclusion on whether the school districts could pursue such a claim.

In the most recent edition of its complaint, filed in December, Indiana claimed that if the law stands, it would be compelled to comply with its minimum coverage requirements and recognize as full-time employees workers it now classifies as less than full-time or pay a tax penalty.

Provision triggered

That provision, the judge said, is triggered for employers when at least one of its full-time employees acquires insurance from an exchange and qualifies for the tax credit.

“If no federal subsidies are available in a state because the state has not established its own exchange, then employers in that state may offer their employees non-compliant insurance, or no insurance at all, without being exposed to any assessable payments under the ACA,” according to the state’s complaint.

Bryan Corbin, a spokesman for Indiana Attorney General Greg Zoeller, said in an e-mail that he couldn’t immediately comment on Lawrence’s decision. The U.S. Justice Department press office didn’t immediately respond to a phone message after regular business hours seeking comment on it.


  • Politically Motivated Decision?
    Looks like another politically motivated decision by the court despite the case's merits. I continue to lose confidence in the court system. I suspect I am not alone.
  • Thank You
    Indiana is indeed soulless. One would think Marie Anoinette was governor "They have no bread.....Let them eat cake"
  • Soulless Indiana
    The State is suing to prevent Hoosiers working for our schools from receiving health insurance. If that doesn't worry you, then you have lost your humanity. The GOP has been cutting our public education to the core, and the real effect it has had on the schools work force is coming to life.

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I am so impressed that the smoking ban FAILED in Kokomo! I might just move to your Awesome city!

  2. way to much breweries being built in indianapolis. its going to be saturated market, if not already. when is enough, enough??

  3. This house is a reminder of Hamilton County history. Its position near the interstate is significant to remember what Hamilton County was before the SUPERBROKERs, Navients, commercial parks, sprawling vinyl villages, and acres of concrete retail showed up. What's truly Wasteful is not reusing a structure that could still be useful. History isn't confined to parks and books.

  4. To compare Connor Prairie or the Zoo to a random old house is a big ridiculous. If it were any where near the level of significance there wouldn't be a major funding gap. Put a big billboard on I-69 funded by the tourism board for people to come visit this old house, and I doubt there would be any takers, since other than age there is no significance whatsoever. Clearly the tax payers of Fishers don't have a significant interest in this project, so PLEASE DON'T USE OUR VALUABLE MONEY. Government money is finite and needs to be utilized for the most efficient and productive purposes. This is far from that.

  5. I only tried it 2x and didn't think much of it both times. With the new apts plus a couple other of new developments on Guilford, I am surprised it didn't get more business. Plus you have a couple of subdivisions across the street from it. I hope Upland can keep it going. Good beer and food plus a neat environment and outdoor seating.