Two Lawmakers Seek Info on Premium Tax Credit Eligibility

¹See generally Affordability of Employer Coverage for Family Members of Employees, 87 Fed. Reg. 20354 (Apr. 7, 2022); see also Brian Blase, Paragon's Work Featured Prominently By Wall Street Journal This Week, PARAGON HEALTH INST. (Apr. 8, 2022), https://paragoninstitute.org/paragons-work-featured-prominently-by-wall-street-journal-this-week/ [hereinafter “Blase, Paragon's Work Featured Prominently”]; Brian Blase, ACA Reality Check & The Potential Politicization Of The IRS, PARAGON HEALTH INST. (Apr. 4, 2022), https://paragoninstitute.org/aca-reality-check-the-potential-politicization-of-the-irs/ [hereinafter “Blase, Potential Politicization Of The IRS”].

²See Health Insurance Premium Tax Credit, 78 Fed. Reg. 7264, 7265 (Feb. 1, 2013).

³87 Fed. Reg. at 20355, 20356.

⁴See Blase, Paragon's Work Featured Prominently, supra note 1; Blase, Potential Politicization Of The IRS, supra note 1; Brian Blase, A Biden Administration Regulatory “Fix” to the “Family Glitch” Would Be Illegal and Harmful, GALEN INST. 3 (May 2021) (“Media reports suggest that Biden administration political appointees, who may be less concerned with the displacement of employer coverage and burgeoning federal deficits, are pushing career officials to revisit their definitive conclusion during the Obama administration that such a 'fix' could not be accomplished without legislation.” (emphasis added)), https://galen.org/assets/Regulatory_Fix_to_Family_Glitch_Would_Be_Illegal_and_Harmful.pdf [hereinafter “Blase, Illegal and Harmful”].

⁵See 26 U.S.C. § 36B(a) (“In the case of an applicable taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the premium assistance credit amount of the taxpayer for the taxable year.”).

⁶Id. § 36B(b)(1) (explaining that the premium tax credit must be for a “coverage month”); id. § 36B(c)(2)(B) (excluding from the definition of “coverage month” any month when an individual “is eligible for minimum essential coverage”); id. § 36B(c)(2)(C)(i) (explaining that an employee is not “eligible for minimum essential coverage” unless the employer-sponsored plan is “affordable”). The plan must also provide “minimum value.” Id. § 36B(c)(2)(C)(ii).

⁷Id. § 36B(c)(2)(C) (explaining that § 36B(c)(2)(C) “shall also apply to an individual who is eligible to enroll in the plan by reason of a relationship the individual bears to the employee”); see also 26 C.F.R. § 1.36B–1(d) (defining “taxpayer's family” as “the individuals for whom a taxpayer properly claims a deduction for a personal exemption under section 151 for the taxable year”).

⁸See 26 U.S.C. § 36B(c)(2)(C)(i)(II) (explaining that an employer-sponsored plan is not affordable when “the employee's required contribution (within the meaning of section 5000A(e)(1)(B)) with respect to the plan exceeds” a certain percentage of household income (emphasis added)); id. § 5000A(e)(1)(B) (defining “required contribution” as “the portion of the annual premium which would be paid by the individual . . . for self-only coverage” (emphasis added)); see also 26 C.F.R. § 1.36B–2(c)(3)(v)(A)(2) (“[A]n eligible employer-sponsored plan is affordable for a related individual if the portion of the annual premium the employee must pay for self-only coverage does not exceed the required contribution percentage. . . .”).

⁹Brian Blase, Commentary, To 'Fix' the ObamaCare 'Family Glitch,' Biden Politicizes the IRS, WALL ST. J. (Apr. 7, 2022) [hereinafter “Blase, Biden Politicizes”].

¹⁰See 87 Fed. Reg. at 20354.

¹¹Id. (explaining that the proposed rule “would amend the existing regulations regarding eligibility for the premium tax credit . . . to provide that affordability of employer-sponsored minimum essential coverage . . . for family members of an employee is determined based on the employee's share of the cost of covering the employee and those family members, not the cost of covering only the employee”).

¹²See 26 U.S.C. §§ 36B(c)(2)(C)(i)(II), 5000A(e)(1)(B); 78 Fed. Reg. at 7265; Blase, Potential Politicization Of The IRS, supra note 1 (“This issue has been dubbed the 'family glitch' although the law was written this way intentionally. . . . 'The glitch was not an accident — basing affordability on the whole family's premiums would have increased federal costs significantly.'” (citation omitted)).

¹³See 78 Fed. Reg. at 7265 (noting that “comments asserted that the affordability of coverage for related individuals should be based on the portion of the annual premium the employee must pay for family coverage” and rejecting that reading because “[t]he language of section 36B, through a cross-reference to section 5000A(e)(1)(B), specifies that the affordability test for related individuals is based on the cost of self-only coverage”); Blase, Potential Politicization Of The IRS, supra note 1 (“Back in 2011 and 2012 when the Obama administration was writing regulations to implement Obamacare, they spent enormous time on the family glitch. Many progressives pushed for a broader interpretation with affordability measured on family coverage instead of self-only coverage. But the Treasury Department, the IRS, the Government Accountability Office, the Joint Committee on Taxation, and the Congressional Budget Office all reached the same conclusion — the statute based affordability on the cost of self-only coverage.”); Blase, Illegal and Harmful, supra note 4, at 8 (noting that the Obama-Biden IRS reached its conclusion despite “significant political pressure at the time to adopt a different interpretation”); see also Blase, Biden Politicizes, supra note 9 (“Mr. Obama's presence at the White House was ironic given that the IRS's proposed policy reverses its decision from a decade ago, when he was president. At that time, the IRS believed it had to follow the law as written.”); Editorial Board, About That ObamaCare 'Glitch,' WALL ST. J. (Apr. 6, 2022) (“In 2013 even the Obama-era IRS ruled that the subsidy was tied to the cost for the individual. Congress has tried — and failed — to fix the glitch. None of this stopped President Obama from appearing at the White House this week to cheer this subsidy expansion that his own Administration didn't think could be done without new legislation.”).

¹⁴See 5 U.S.C. § 706(2)(A), (C).

¹⁵See, e.g., Adam Liptak, Supreme Court Blocks Biden's Virus Mandate for Large Employers, N.Y. TIMES (Jan. 13, 2022); US judge throws out Biden mask mandate for planes and trains, BBC (Apr. 19, 2022); Letter from Rep. Jim Jordan et al., Ranking Member, H. Comm. on the Judiciary, to Hon. Lina Khan et al., Chair, FTC, at 2 (July 29, 2021) (“The Democratic [FTC] Commissioners have imposed new obligations on American businesses that exceed the agency's authority in statute.”).

¹⁶Several bills that would have changed the statute to fix the “family glitch” have been introduced in Congress — but none have become law. See, e.g., H.R. 4865, 113th Cong. § 3 (2014); S.2434, 113th Cong. § 3 (2014); S.2132, 115th Cong. § 3 (2017); H.R. 5155, 115th Cong. § 103 (2018); S.2582, 115th Cong. § 205 (2018); S.1935, 116th Cong. § 3 (2019); S.1213, 116th Cong. § 206 (2019); H.R. 1425, 116th Cong. § 103 (2019); H.R. 1870, 116th Cong. § 2 (2019); H.R. 1884, 116th Cong. § 102 (2019); S.4521, 116th Cong. § 102 (2020). See also Editorial Board, supra note 13 (“Congress has tried — and failed — to fix the glitch.”).

¹⁷See Encino Motorcars, LLC v. Navarro, 579 U.S. 211, 221–22 (2016).

¹⁸See Blase, Paragon's Work Featured Prominently, supra note 1 (“The Kaiser Family Foundation estimates that about five million people are affected by the glitch. Nine in 10 of them are currently covered by a spouse's or parent's employer plan.” (citation omitted)).

¹⁹Id. (citation omitted).

²⁰Estimated Effect on the Deficit of Rules Committee Print 116-56, the Patient Protection and Affordable Care Enhancement Act, CONG. BUDGET OFF. (June 24, 2020) (estimating that it would cost more than $45 billion from 2020 to 2030 to “[e]xpand[ ] affordability for working families to fix the family glitch”), https://www.cbo.gov/system/files/2020-06/Patient_Protection_and_Affordable_Care_Enhancement_Act_0.pdf; see also Blase, Illegal and Harmful, supra note 4, at 12 (noting that “[a]n updated estimate would likely now show a much higher cost”).

²¹Cf. Grace-Marie Turner, Top Reasons Why Obamacare Is Wrong For America, FORBES (Jan. 17, 2020) (“Obamacare required health insurance to cover a long list of 'essential benefits.' Insurance companies tried to keep premiums as low as they could despite the new benefit mandates so they instead jacked up deductibles and copays and created ultra-narrow networks.” (emphasis omitted)), https://www.forbes.com/sites/gracemarieturner/2020/01/17/top-reasons-why-obamacare-is-wrong-for-america/?sh=68250733c846.

²²Cf. Blase, Illegal and Harmful, supra note 4, at 11; see also 87 Fed. Reg. at 20360 (acknowledging that, if the rule were adopted as proposed, some families may have “split coverage” — “self-only employer coverage for the employee plus [premium-tax-credit] subsidized Exchange coverage for related individuals” — and that “split coverage also means multiple deductibles and maximum out-of-pocket limits for the family, which potentially increases out-of-pocket costs for families”).

²³Editorial Board, supra note 13 (“Mr. Obama made a revealing remark at Tuesday's rollout, which is that the point of ObamaCare was to 'plant a flag,' to make a down payment. This week's rule is a reminder that the main White House political goal isn't to help the poor or those with terrible ailments, but over time to move all Americans to government health insurance.”).

²⁴STAFF OF H. COMM. ON OVERSIGHT & GOV. REFORM, THE INTERNAL REVENUE SERVICE'S TARGETING OF CONSERVATIVE TAX-EXEMPT APPLICANTS: REPORT OF FINDINGS FOR THE 113TH CONGRESS ii–iii (Dec. 23, 2014), https://republicans-oversight.house.gov/wp-content/uploads/2014/12/December-2014-IRS-Report.pdf; id. at 159 (“Documents and information available to the Committee show that the IRS works in conjunction with the [Obama-Biden] Administration and its allies to promote partisan objectives. Evidence suggests that the [Obama-Biden] Administration viewed the IRS as a political and policy extension of the Administration.”); see also Kimberley A. Strassel, Opinion, About Those Missing Emails, WALL ST. J. (June 19, 2014) (“We know from the public record that starting in 2010 the most powerful leaders of the Democratic Party — President Obama, Senate chairmen, House Democrats — ran a ceaseless campaign pressuring the IRS to silence conservative groups. We also know from internal IRS emails that Ms. Lerner, the former head of exempt organizations, was at the epicenter of an agency effort to silence those very groups, in the precise same time frame.”); Kimberley A. Strassel, Opinion, The IRS Scandal Comes Into Focus, WALL ST. J. (Apr. 10, 2014) (“As the Camp timeline and details show, the IRS responded to liberal calls to go after conservative groups.”); id. (“We know, too, that Ms. Lerner did some of this in contravention of IRS policy, for instance involving herself in an audit decision that was supposed to be left to a special review committee. We have the story of a powerful bureaucrat targeting an organization and circumventing IRS safeguards against political or personal bias.”).

²⁵Cf. JOINT STAFF OF H. COMM. ON OVERSIGHT & GOV. REFORM & H. COMM. ON WAYS & MEANS, ADMINISTRATION CONDUCTED INADEQUATE REVIEW OF KEY ISSUES PRIOR TO EXPANDING HEALTH LAW'S TAXES AND SUBSIDIES 34 (Feb. 5, 2014) (“As the non-partisan Congressional Research Service legal analysis noted, the plain language of the statute does not appear to authorize [ObamaCare's] premium tax credits or the resulting penalties in states that elect not to establish exchanges.”), https://republicans-oversight.house.gov/wp-content/uploads/2022/06/IRS-Rule-OGR-WM-Staff-Report-Final2.pdf; id. at 3–4 (“The evidence gathered by the Committees indicates that neither IRS nor the Treasury Department conducted a serious or thorough analysis of the [ObamaCare] statute or the law's legislative history with respect to the government's authority to provide premium subsidies in exchanges established by the federal government [rather than the states]. IRS and Treasury merely asserted that they possessed such authority without providing the Committees with evidence to indicate that they came to their conclusion through reasoned decision-making.”).

²⁶See Blase, Paragon's Work Featured Prominently, supra note 1; Blase, Potential Politicization Of The IRS, supra note 1.

²⁷See JOINT STAFF OF H. COMM. ON OVERSIGHT & GOV. REFORM & H. COMM. ON WAYS & MEANS, supra note 25, at 18 (“When the 36B proposed rule was finalized, the text of the proposed rule was sent to Emily McMahon for review. As part of the regulatory clearance process, a policy memo written by David Gamage, a counsel in Treasury's Office of Tax Policy, accompanied the proposed rule.”); id. at 19 n.81 (citing the policy memo that David Gamage signed).