Health care rules specify exemptions, penalties

The Obama administration issued regulations Wednesday making it clear that the state’s choice not to accept Medicaid expansion funding won’t set up thousands of poor Oklahomans for penalties under the Affordable Care Act.

The rules released by the IRS and the U.S. Department of Health and Human Services also gave further definition to other exemptions to the federal law’s individual mandate, including members of Indian tribes and adherents of religious sects whose tenets prohibit health coverage.

But the rules also make it clear that the coverage requirement will be enforced, meaning anyone who isn’t exempt will have to pay a tax penalty if they don’t have qualifying coverage.

The regulations are in clear conflict with the Oklahoma Constitution, which prohibits any law or rule that compels participation in any health care system. The constitutional right, added by voters on a 67 percent votes in 2010, was a direct response to the Affordable Care Act and its individual mandate.

Oklahoma Attorney General Scott Pruitt has included the conflict between the individual mandate and the state constitution in his federal court challenge to the Affordable Care Act. That challenge is currently pending before U.S. District Judge Ronald White in the Muskogee-based Eastern District U.S. Court.

Pruitt’s suit argues, among other things, that while the U.S. Supreme Court upheld the constitutionality of the individual mandate as an exercise of the federal government’s taxing power, the state constitutional protection remains valid.

A spokesman for Gov. Mary Fallin reiterated her opposition to the federal health law and made reference to the state’s constitutional provision.

“Gov. Fallin is strongly opposed to Obamacare and the new taxes included in the law,” said spokesman Alex Weintz. “She believes the people of Oklahoma have spoken on this issue.”

Rep. Mike Ritze, R-Broken Arrow, is a physician and a leading opponent of enforcing the federal health care law in Oklahoma. He said the federal regulation will help opponents mold legislation to block the Affordable Care Act at the state border.

“We didn’t know what the guidelines were going to be, so we didn’t know how to respond,” he said. “Now that we know the guidelines … then we’ll move forward with legislation to block that.”

More important than blocking the individual mandate is blocking the entire law in the state, he said.

Ritze has proposed a bill to nullify the law in Oklahoma and provide criminal penalties for any government official who tries to enforce it. He said about a dozen other state legislatures are also looking at nullification laws.

Rep. Lewis Moore, R-Arcadia, is chairman of the new States Rights Committee in the state House and the author of another nullification proposal.

The people of Oklahoma have spoken clearly in opposition to the individual mandate, Moore said.

“The problem is, how do we cleanly enforce what our people want?” he said.

Under the Affordable Care Act, people who don’t have qualifying coverage and aren’t exempt from the mandate will have to pay a tax penalty of either a flat amount or a percentage of the person’s taxable income, whichever is higher.

The flat figure is $95 per person in 2014, but rises to $325 in 2015 and $695 in 2016, after which it is indexed to inflation.

The percentage penalty for 2014 is 1 percent of the difference between the household’s taxable income and the tax-filing threshold. A Blue Cross Blue Shield online publication estimates a $400 penalty for a family with a household income of $50,000

The percentage penalty rises to 2 percent in 2015 and 2.5 percent in 2016.

In its press release on the new regulations, the Obama administration emphasized the exemptions to the enforcement regulations.

Although officials had said as much previously, the new regulations make it clear that people who would qualify for Medicaid under the federal law but who don’t get it because their state doesn’t participate in the program expansion will not be subject to the tax penalties.

Under the Affordable Care Act, states can expand their Medicaid programs to cover anyone living in a household with income below 133 percent of the federal poverty level, currently $30,657 for a family of four.

But Fallin has announced Oklahoma won’t participate in that expansion because of its potential costs, although the law promises to pay 100 percent of the costs of new benefits for the first three years.

If Oklahoma opts out of the expansion, only people who fall in certain categories – the aged, blind, disabled, children and pregnant women – are eligible for Medicaid.

People in nonexpansion states and whose household incomes fall below 100 percent of the poverty level aren’t eligible to purchase federally subsidized private insurance through an Affordable Care Act health insurance exchange. As a result, some 155,000 uninsured Oklahomans would be too poor for the exchange and ineligible for Medicaid.

Although uninsured, those people won’t have to pay the individual mandate penalties, the regulations say.

Neither will noncitizens who are in the nation illegally, members of Indian tribes and people in several other exempt groups.

The Congressional Budget Office has estimated less than 2 percent of Americans will have to pay tax fines under the individual mandate, according to the U.S. Centers for Medicare and Medicaid Services.


Federal exemptions to the individual mandate
Individuals who cannot afford coverage
Taxpayers with incomes below the IRS filing threshold
Members of Indian tribes
Hardships, including people who would be eligible for coverage by a Medicaid expansion but did not receive it because the state rejected the offer
People who experienced coverage gaps of less than three consecutive months without coverage
People who do not have coverage because it would violate their religious conscience
Members of health care sharing ministries
People who are incarcerated
Noncitizens who are not “lawfully present” in the nation

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