Senator Hatch Attacks Proposed ACA Premium Tax Credit Regulations

U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, says the premium subsidy provisions of the Patient Protection & Affordable Care act (Affordable Care Act) does not authorize the Internal Revenue Service (IRS) to allow individuals purchasing coverage through a federal health insurance exchange to receive the tax credits and subsidies authorized under new Internal Revenue Code § 36B to offset the cost of being mandated to buy health insurance created under Affordable Care Act Section 1311.  

As created under the Affordable Care Act, Internal Revenue Code (Code) § 36B grates a refundable tax credit for certain individuals purchasing qualifying health insurance coverage from a qualified health plan.  According to Senator Hatch, IRS proposed regulations here to implement Code § 36B would violate its provisions by allowing individuals that buy coverage through federal exchanges to claim premium tax credits because the express language of the statute only calls for amounts paid for coverage from “State” exchanges to count when calculating the amount of the credit.

In a December 1, 2011 letter to Treasury Secretary Timothy Geithner and IRS Commissioner Douglas Shulman available for review here, Senator Hatch that Code § 36B only allows for its premium tax credit to be claimed when coverage is purchased from a State exchange.  According to Senator Hatch, the amount of the credit is determined based on the annual sum of the monthly “premium assistant amounts.”  Section 36B currently defines the Premium Assistance Amount as equaling the lesser of … (A) “the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent … and which were enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act” or (B) an amount calculated with reference to the “applicable second lowest cost silver plan.”   An applicable second lowest cost silver plan must be a plan offered “through the same Exchange through which the qualified health plans taken into account under” the immediately-aforementioned subparagraph (A)  – that is, through “an Exchange established by the State under [section] 1311” of PPACA.

In his December 1, 2011 letter, Senatory Hatch warned the Department of Treasury that the implementation of a regulation that would allow individuals to claim a premium tax credit under Code § 36B for coverage purchased through a federal exchange would be ‘legislative change to federal law without formal approval from Congress’ that would ‘exceed the constitutional authority of the Executive Branch.”  Given these concerns, Senator Hatch’s letter asks the Department of Treatsury to ensure that “any final regulations regarding Code section 36B clarify that the section 36B Health Insurance Premium Tax Credit will not be available based upon enrollment in a Federally-facilitated Exchange.

The Internal Revenue Service held hearings on its proposed regulations in November and has been accepting comments on their provisions.  Parties interested in reviewing or commenting on the proposed regulations should see here.

 Project COPE: Coalition On Patient Empowerment & Coalition For Responsible Health Care Quality

Project COPE: Coalition on Patient Empowerment & the Coalition for Responsible Health Care Quality  are coalitions of individuals and organizations that share the belief that every American and American organization has a stake, and something to contribute to our ability to find and implement the best options for ensuring that the U.S. health care system provides quality, affordable health care.

Health care impacts every individual and every organization in America.  Consequently, every American citizen and organization including but not limited to health care providers, employers, insurer, and community organizations should take part.    The government, health care providers, insurers and community organizations can help by providing education and resources to make understanding and dealing with the realities of illness, disability or aging easier for a patient and their family, the affected employers and others. At the end of the day, however, caring for people requires the human touch.  Americans can best improve health care by not waiting for someone else to step up or speak up. 

Project COPE urges and invites each individual and organization speak up to help communicate and act to make health care work for themselves, their families and others when you can and share your input to help preserve and continue to develop real meaningful improvements to our health care system by joining Project COPE: Coalition for Patient Empowerment here by sharing ideas, tools and other solutions and other resources. 

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can access information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can access other recent updates and other informative publications and resources. 

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