Federal Judge Rules Subsidies Unlawful

A federal judge in Oklahoma found Tuesday that the Internal Revenue Service rule that the administration issued to set up tax-credit subsidies was “an invalid implementation” of the law based on his interpretation of it.

A U.S. Justice Department spokesman said the administration will appeal the decision.

The issue of whether the subsidies are legal is being fought in many courts across the country and could end up before the U.S. Supreme Court. The outcome of the challenges will determine whether subsidies will be available in all 50 states or only in some.

The stakes are high for the administration. If subsidies are no longer available to two-thirds of the states, coverage may become unaffordable to many, making the law considerably less attractive.

This issue has already advanced beyond the federal district courts. Earlier this summer a pair of federal appellate courts, the U.S. Court of Appeals for the District of Columbia Circuit and the Fourth Circuit in Richmond, came down on either side of the issue.

Impacts of Case

There is no immediate impact of this ruling; however, contingent on the outcomes of future appeals and court cases the future of subsidies in many states (including Missouri) could be in question. Employers should not take any action before a final decision has been decided by a higher court and new guidance has been given.

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About Christopher Johnson

Christopher manages the consulting services department of J.W.Terrill providing regulatory, analytical, technical and wellness support to clients.

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