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State, schools sue U.S. government over Obamacare

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Fifteen Indiana school districts and the state of Indiana have filed a lawsuit challenging the federal health care law and subsidies that are available to Hoosiers under rules set by the IRS.

If successful, the lawsuit could cost individual Hoosiers hundreds – even thousands – of dollars, although Attorney General Greg Zoeller said that’s not the goal.

The federal suit – filed against the Internal Revenue Service and several other agencies – also questions whether federal officials can impose an employer mandate and a tax penalty on state and local government.

“This case is about the fundamental relationship between the state and federal government,” said Zoeller, a Republican who is representing the state, the lead plaintiff in the case. He accuses the federal government of “overstepping its bounds that Congress set.”

“We’re a government,” he said. “We don’t pay taxes. We don’t fill out a tax form. Under what authority does Congress issue a tax penalty?”

The underlining argument in the case is complicated and it calls into question whether Hoosiers should qualify for federal tax breaks that are being used as subsidies to help Americans afford insurance. At issue are the health exchanges – essentially online marketplaces – where citizens who don’t have insurance through their workplaces can shop for coverage.

The suit says the Affordable Care Act – known as Obamacare – only authorized the tax breaks for people who purchase insurance through state-based exchanges, which Indiana doesn’t have. Former Gov. Mitch Daniels told federal officials last year that Indiana would not create its own exchange and left the job instead to the federal government. The federal marketplace opened for business last week.

But the Internal Revenue Service has since expanded the rules for federal subsidies so they are available to all qualified Americans who purchase insurance through an exchange, whether it’s run through the state or federal government, the suit says.

That will save Hoosiers money. But it could cost employers, according to the lawsuit.

That’s because the Obamacare law requires companies to pay penalties if they fail to provide minimum health coverage to employees – and at least one of those employees signs up through an exchange and receives the federal subsidy.

Under the law as written, no Indiana company could be subject to the penalty because the state doesn’t have an exchange and therefore employees couldn’t qualify for a subsidy, according to the lawsuit.

But as revised by the IRS, the health care program opens the subsidies to residents of all states – including Indiana – which also makes companies in the state subject to the penalties.

That affects private firms and nonprofit organizations but also government entities, Zoeller said. And Congress doesn’t have the authority to impose taxes or tax penalties on state or local governments, Zoeller said.

“We respect the United States Supreme Court’s ruling last year upholding the individual mandate to buy health insurance, but it did not address the recent IRS regulations extending the reach of the ACA’s employer mandate,” Zoeller said. “We contend the ACA improperly regulates sovereign states and does not authorize the IRS to do what it is doing in treating the state as a taxable entity.”

The suit also contends that the law’s requirement that employers offer health insurance to all employees who work at least 30 hours is onerous.

Those provisions have led schools to reduce the hours of employees that don’t currently receive benefits, including instructional aides, bus drivers, cafeteria workers, substitute teachers and other part-time employees, according to a statement released by the schools.

“The costly and burdensome employer mandate the IRS wrongly applies to government employers such as our school corporation interferes with our ability to efficiently manage our workforce,” said Martinsville Schools Assistant Superintendent Randy Taylor.

“We always strive to be good stewards of tax dollars in educating our community’s students, but our school corporation’s efforts are undermined by the IRS overstepping its bounds that Congress set,” he said. “As public servants who revere the Constitution, we join with the state in asking the federal court to correct the IRS’s overreach.”

The school districts are represented in the lawsuit by Bose McKinney & Evans, an Indianapolis law firm.

The school corporations involved in the suit:

— Benton Community School Corporation

— Community School Corporation of Eastern Hancock County

— John Glenn School Corporation

— Madison Consolidated Schools

— Metropolitan School District of Martinsville

— Monroe-Gregg School District

— Mooresville Consolidated School Corporation

— North Lawrence Community Schools

— Northwestern Consolidated School District of Shelby County

— Perry Central Community Schools

— Shelbyville Central Schools

— South Henry School Corporation

— Southwest Parke Community School Corporation

— Southwestern Jefferson County Consolidated School Corporation

— Vincennes Community School Corporation

This story will be updated.
 

 

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  • informed
    by the way, our company's group insurance just renewed at a 40% increase. we were lucky. many are worse. many more are getting cancelled altogether. small business is literally being asked to fund all the cost for this expansion in coverage. where are all of the cost savings we were all promised?
  • Read the filing, Jack
    Read the filing Jack. It clearly states that the State of Indiana has no intention of having the "Exchanges" and by that degree no Hoosier should be able to receive Government subsidies to help pay for their health insurance. If this lawsuit succeeded in doing what it intends, otherwise qualified Hoosiers would be prohibited form receiving the same subsidy to buy health insurance that people in other States receive. GOP in the State is working extra hard to prevent people from receiving health insurance coverage.
  • States' Rights
    Boy, MarkusR you really are confused about what goes on in the state. Regardless of his campaign gaff, Murdock courageously stood up to the feds intent on violating establish bankruptcy law in order to do a slight of hand deal with Chrysler's creditors - one of which was an Indiana state employee retirement fund. He stood up for the Hoosier pension fund investments in Chrysler that the feds wanted to make worthless in favor of their union buddies. He lost, but he fought a good, and righteous battle. We should all be proud of him for what he did.
    • Revolution Time
      The enrollment period has finally got this socialistic program back on front burner of the American public. Like much of Obama's ideas hearing Nancy Pelosi say "we have to pass this to see what's in it!" should have been enough to warn clear-thinkers, (not those that elected him to begin with obviously.) All previous comments cover many of the thoughts and feelings the majority of citizens now hold regarding the ACA. "Affordable" Care Act is a joke in itself. An acquaintance, floor salesperson at Lowe's and past middle age found upon calling that his premium was ONLY $426 a month and he is single! There goes the new car, refrigerator, TV, dress suit, week's vacation trip...you can fill it in for yourself. Amazing seeing hours cut to 29 per week to avoid employers paying out even more and no new job created in atmosphere of 10% unemployment which likely is doubled if you add in those who have given up even finding a new job. Congratulations all you people who bought the snake oil salesman's goods yet again...you wanted change and you got it!
      • No we're not
        DC Indy, I appreciate your clarification in matters of law and ,specifically, 'law-of-the-land' but not everyone is a lawyer just like everyone is not ... well you name it. Jargon gets misused all the time. Cement is often used to describe concrete which has cement and sand. But you knew that already, right? .............................................MarkusR, Indiana is not denying anything to anybody. You can get insurance through a Federal exchange. Apparently the Attorney General is challenging that if the State does not have an exchange, then the people who buy through the Fed do not qualify for subsidy. This has to be settled because employees of schools and other 'businesses' would not qualify. The IRS says all qualify whether you purchase through the State or the Fed. I think it's just a suit about technicalities and will be found in favor of the IRS. Otherwise, the law WOULD be unfair to people in states like Indiana. If ACA, Universal or NHS is the way of the future, then we should get rid of insurance (profit) based mechanisms. But this is the beginning of the slippery slope because other 'rights' will dictate price controls and, if one, then all. That is, socialism.
      • Republicans Against Hoosiers
        Once again another Republican state official who is interested in spending our tax money fighting against the interests of our own citzens. Does anyone remember Mourdock?
        • Repeal it
          Nothing is settled here. This is ill-conceived law and must be repealed. The fight will go on.
        • informed
          clearly many of u don't own businesses, aren't subject to complying with the law (beyond paying your $95 fine if you don't buy healthcare) and are woefully uninformed. surprise, it's not all free.
        • The simple facts are...
          the ACA/ObamaCare was never ready for prime time in the first place. When Scott Brown was elected in Mass and was going to be the "41st" vote against the bill, the Dems panicked and rushed through this DRAFT bill and as you might remember did it under the reconciliation process. The whole thing was cluster F***. Now, after the bill has been passed we find out what a unfinished piece of business it is. Remember what the idiot Nancy Pelosi said: "We have to pass the bill to know what's in it"? Well know we do, and it stinks. This law ought to be trashed and the process started all over again. A market-based approach will work if given a chance. The Dem's, in spite of knowing what a disaster this law is, are resisting because this is their holy grail for taking the country down the path of socialism.
        • State hurting citizens
          State of Indiana has decided to keep its citizens from affording health insurance. Comment policy prevents me from properly describing these sociopaths.
        • It Hurts Us All
          Doesn't anyone believe this is exactly what has to happen to every single business out there? It is not just governmental offices - it's everyone from the corner coffee shop to the big box mall stores and back! Why can't it be a simple program for those who need it rather than shoving it down everyone's throat? Let's just call it what it is...socialism!
          • Ongoing Soap Opera
            Where does it all end? As far as I have seen, it costs less for employers to pay the penalty than to provide group health to an employee. The real issue is retention of good staff, The government just keeps poking the bull and getting involved (and not having enough capital to pay for it all) Next episode - The Debt Ceiling Also Rises!
          • Think Independently
            It doesn't appear that many of the commenters on this thread are lawyers. Terms such as "settled law" or "law of the land" are used to persuade you that sommething cannot or should not be subject to change. Everyone ought to know that law is only "settled" until it is successfully challenged, legislatively repealed or modified, which happens all of the time. It was the "law of the land" that one could smoke in a public building until a few years ago. The Voting Rights Act was "settled law" for decades until last year. Gay marriage? Illegal everywhere until a few years ago. Lawyers can't hire their clients. These school corporations are waging a legitimate battle against a law which imposes unfunded mandates they can't afford. They have clearly decided that the cost of the fight is worth it compared to mere acceptance of the alternative. In this country, we are allowed to make that determination, at least for now.
          • Pure Politics
            Did everyone forget this law was enacted via a democratic process? Why is a market-based health care system that was originally a Republican idea such a threat to so-called conservatives? Why anyone would feel so strongly about protecting a health care system that wasn't working in the first place is difficult to comprehend. The political games being played around the Affordable Care Act is a great example of how money in politics are eroding the once high standard for government we once had in the U.S. This nonsense is a direct result of electing non-compromising extremists to run Congress and it appears the State of Indiana is looking to be part of the Circus.
            • Screw the Hoosiers
              So essentially, by going forward with this lawsuit – The state is trying to help out the business/employer interests, at the expense of Hoosier Citizens??? Essentially what was stated in the first few paragraphs is Zoeller charging that NO ONE in Indiana, who applies for insurance through the exchange should get a subsidy to help offset the cost of the insurance if they are within those income ranges that are allowable to receive one. Great job State! Way to look out for our citizens - BS. Just drop it already - and why don't we actually see what this law in action does FIRST - then tweak it. What’s the point in scrapping it all now? What system has been proposed that is BETTER than this - because the old way of doing things was majorly flawed to. But I guess an alternative plan isn't being offered if it is scrapped....figures.
            • No Obama is a Marxist
              Just because the federal government passes a law or issues a regulation does not necessary make it legal and constitutional. Furthermore, the Supreme Court is not the final word on what is constitutional in this country, the states are. Indiana and all states in this country, which created the federal government, have the authority and obligation not to follow illegal federal actions. This is called nullification and it actually happens all the time. Just last week, California (of all states!)nullified portions of the federal NDAA pertaining to internment of their citizens by the feds. You might also recall that Colorado and Washington recently nullified portions of the federal Controlled Substances Act by de-criminalizing personal use of marijuana. If you want to know more about Obama do research on your own. I did. His entire family are Marxists, and he himself wrote in one of his autobiographies (talk about a self-absorbed narcissist!) that his mentor was a man he describe as "Uncle Frank", who it turns out was Frank Marshall Davis, one of the most hard core Communists in the United States during the 50's & 60"s. It's a fact, so check it out for yourself. And all this is just for starters...there's a lot more. This guy is so red that I've heard that if he wasn't elected, he couldn't get a security clearance to enter the White House!
            • Once again
              Our state government is spending our tax money to screw us over, all to score political point with the Obama-haters. Ridiculous, shameful, and idiotic. The text of the law allows the IRS to define the regulations relating to this, so these groups are likely wasting gobs to tax money for one-more-bite at the apple. This, likewise, will fail.
            • Cut part-time hours
              Just do what IU did and reduce part time to 29 hours a week and make scheduling over that time limit a termination offence. Solves everything.
            • Waste of money
              The Affordable Care Act is the law of the land. The Supreme Court upheld it so why do these school corporations and the state waste money filing lawsuits?Will they file lawsuits anytime they don't like a law that has been vetted by the highest court?
            • Obama is not a socialist.
              Another day, another Affordable Care Act lawsuit. Yawn. This will go down in flames, too. Please just accept this is settled law and move on to finding a way to pay for it. Perhaps if Indiana funded its schools at decent levels rather than giving out unnecessary tax cuts, these school corporations could afford this. As for Obama being a socialist, he's not. Please read this article for a definition of the word and for an explanation of why the Affordable Care Act does not qualify as socialism. http://www.newsday.com/opinion/oped/smerconish-obamacare-is-many-things-but-it-s-certainly-not-socialism-1.6211076
              • Should have stayed in school
                Because your socialist tirade run-on sentence makes little or no sense. That being said, I was unaware that full-time public school employees received no benefits. This should be rectified.
              • Re:stupid
                Liz - really? Really? wow.
              • Stupid
                Come on. The money they're likely to spend on this lawsuit could be used to provide health care.
                • Well, I'll be!
                  These school corporations have the audacity to tell our socialist-in-chief that his failure to take Econ101 does not make incumbent upon the taxpayers the funding of unconstitutional mandates just because he wishes to spend beyond our means? Say it isn't so!!!

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