Yesterday, the Court of Appeals for the D.C. Circuit ruled that the language of the Affordable Care Act clearly states the IRS may only allow tax credits for those who sign up for “state-run” exchanges. In other words, if you are unlucky enough to live in one of the thirty-six states who decided to let the federal government run the exchange for them, you won’t be eligible for the tax subsidies. It also means, however, that you are less likely to be penalized for not being insured.
Just two hours later, however, the Fourth Circuit issued a contradictory ruling, virtually guaranteeing that this will eventually make it to the Supreme Court.
Indiana is one of those unlucky thirty-six. Under the D.C. ruling, then, Hoosiers would not be eligible for any subsidies. However, it will likely take a while for that to be determined. The ruling came from a three-judge panel, and the federal government has the opportunity to ask for an en banc review from the entire D.C. Court of Appeals before requesting review from the Supreme Court.
The wording of the D.C. panel’s order seems to suggest that our tax returns will be affected this very year. The Fourth Circuit’s ruling only controls Maryland, both Virginias and both Carolinas. We’ll have to see how the administration and IRS respond, but Hoosiers would be smart to keep an eye on this.