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AG Schmidt to Federal Court: Kansas properly opted out of ‘Obamacare’ employer mandate

TOPEKA – (February 7, 2014) – Businesses in states that opted out of setting up a state insurance exchange should not be subject to the so-called “employer mandate,” Kansas Attorney General Derek Schmidt told a federal appeals court yesterday.

The Kansas legal action comes the same week as a new Congressional Budget Office report that found implementation of the Affordable Care Act, including its employer mandate, will stifle job growth and reduce full-time-equivalent employment by more than 2 million.

“Kansas and other states made a conscious decision to opt out of the state-run health insurance exchange, in part to avoid triggering the burdensome mandate on Kansas employers,” Schmidt said. “By ignoring the plain language of the law, the IRS through regulation has effectively deprived Kansas of part of the benefit of the informed decision the state made in opting out.”

Schmidt filed a brief supporting the plaintiffs in the newest challenge to a portion of the Affordable Care Act, also known as “Obamacare.” The plaintiffs, which include Community National Bank based in Seneca, are challenging the Internal Revenue Service’s decision to extend tax credits, which also triggers application of the employer mandate, to employers in states that have opted out of setting up a state-run health insurance exchange. Kansas has opted out of a state-run exchange.

Similar lawsuits challenging the IRS regulation are pending in Oklahoma and Indiana, but the Washington, D.C., case is the first to reach an appellate court.

“This is an important case for Kansas employers and taxpayers,” Schmidt said. “A Kansas small business is among those standing up to the IRS decision to ignore the law, and the State of Kansas is proud to stand with them.”

Kansas was joined in its filing this week by Nebraska and Michigan. The case is Halbig v. Sebelius, in the U.S. Court of Appeals for the District of Columbia Circuit, Case No. 14-5018. The case is scheduled for oral argument on March 25.