Health Insurance Exchanges, one of the major provisions under the Affordable Care Act, are supposed to be implemented in every state by January 1, 2014.  These exchanges represent an online marketplace where insurers sell health plans that must abide by federal qualifications.  These mandated qualified health plans (QHPs)  force individuals to pay higher premiums for health benefits and services they do not necessarily want nor need, and employers are forced to offer these plans to their employees.

States may choose to establish their own health insurance exchanges.  If a state opts-out, the government is required to establish a federal exchange for that state.

Under section 1311 of the Affordable Care Act,  ONLY state-run exchanges receive tax-credits from the IRS as premium assistance subsidies for citizens to afford comprehensive health coverage that is to be mandated through employers.  The legislation DOES NOT AUTHORIZE the IRS to distribute tax-credits within an exchange established by the federal government.

Because tax-credits are restricted to state-run exchanges, 33 states, including North Carolina, have opted for a federally-run exchange – a way to exempt businesses from the employer mandate.

The IRS, however, seeks to exceed its taxation powers.  A recent Forbes article reports:

Specifically, although the Act’s plain language makes clear that a State’s citizens may receive subsidies and a State’s employers are required to offer health insurance if—but only if—the State decides to run the Act’s insurance “Exchange,” a new IRS rule completely rewrites this scheme and purports to make the subsidies and employer mandate applicable even where the State has opted out and the federal government runs the “Exchange.” 

Read more about the issue here.