News From Terre Haute, Indiana

State News

October 8, 2013

Indiana, schools sue over IRS health overhaul rules

Southwest Parke Community one of the 15 school districts

INDIANAPOLIS (AP) — Indiana and 15 public school districts are suing the Internal Revenue Service for allegedly overstepping its authority in imposing “employer mandate” regulations on state and local governments under the federal health care overhaul.

Southwest Parke Community School Corp. is one of the 15 districts. The Vigo County School Corp. may consider joining the lawsuit, according to Superintendent Dan Tanoos, but that would be a school board decision.

The lawsuit filed today in federal court in Indianapolis contends the IRS is improperly treating Indiana as a taxable entity under the Affordable Care Act with regulations that impose financial penalties on state and local governments, including school districts.

The plaintiffs contend those penalties cannot be applied to government employers in states like Indiana that didn’t create their own state health care exchanges.

Attorney General Greg Zoeller says the IRS is creating hardships for state and local government employees such as those in school districts whose hours are being reduced so employers can avoid the penalties.

For school districts, at issue is the ACA’s mandate that employers provide health insurance to all employees who work more than 30 hours per week, considered “full-time” under the law (but part-time by the school district).

According to the lawsuit, because of the IRS rule, Southwest Parke school district has reduced the hours of several part-time employees, including instructional aides, to fewer than 30 hours per weeks so that those employees are consider part-time under ACA.

 “Southwest Parke cannot otherwise afford to provide health insurance for these employees,” the lawsuit states. “This change directly impacts the delivery of educational services to the students of Southwest Parke, including students with learning disabilities.”

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