Health Insurance: What’s an Iowa Farmer (or Sole Proprietor) to Do?

Many farmers and other self-employed Iowans not eligible for Medicare or Medicaid have few choices when it comes to 2018 health insurance. Last week, due to a lack of federal response, Iowa officials withdrew their proposed Stopgap proposal. They submitted the waiver application in an attempt to prop up Iowa’s individual insurance market in the face of skyrocketing premiums. It was hoped that the measure would stabilize the individual market through "innovative solutions." With that proposal off the table, these facts remain.

• Medica is the only insurer writing policies in the Iowa ACA-compliant individual market for 2018. Medica filed a rate request seeking a 56.7% premium increase for its 2018 Iowa plans in August. Proposed plans become final November 1, but potential subscribers can preview sample Medica rates for different Iowa regions here.
• In the past several weeks, thousands of Iowans currently insured on the individual market, including many farmers, received notification that their policies would not be renewed for 2018.
• The Healthcare Marketplace Exchange enrollment period for 2018 begins November 1, 2017, and will remain open for 45 days.
• Iowans with incomes at or below 400% of the Federal Poverty Level (FPL) will generally be eligible for premium tax credits to assist with the cost of high premiums.
• Iowans with incomes above 400% of the FPL will not be eligible for subsidies and will be responsible to pay the entire premium themselves.
• In 2017, 162,000 Iowans are insured in the individual market. Around 80,000 people in this segment are enrolled in plans that were purchased prior to the ACA. The balance purchased ACA-compliant policies. Approximately 50,000 of those were purchase on the Exchange.

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President Trump Signs Family Farmer Bankruptcy Clarification Act into Law

On October 24, 2017, The Family Farmer Bankruptcy Clarification Act of 2017, received final Congressional approval and was sent to the President for his signature. He signed it into law on October 26, 2017. This provision was part of a larger bill, the H.R.2266 - Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2017, including the Bankruptcy Judgeship Act of 2017. The Bankruptcy Judgeship Act allows for the appointment of new bankruptcy judges in certain regions and modifies some fee provisions. Senators Grassley and Franken also included in this Act, Section 1005, titled “Clarification of rule allowing discharge to governmental claims arising from the disposition of farm assets under chapter 12 bankruptcies.” This provision, also called the Family Farmer Bankruptcy Clarification Act of 2017, is intended to assist struggling farmers by providing them with more options for reorganization through a Chapter 12 bankruptcy.

Section 1005 reverses Hall v. U.S., 132 S. Ct. 1882 (2012), a 5-4 decision which interpreted current law to make it nearly impossible for farmers to discharge in a Chapter 12 bankruptcy capital gains tax arising due to the sale of property after the filing of a bankruptcy petition. Rather, Hall declared that taxes incurred due to the sale of farm assets used in the debtor’s farming operation could be treated as unsecured claims only if the sale occurred in the tax year prior to the filing of the bankruptcy petition. This meant that many farmers could not reorganize their operation by selling assets to “right-size” the business after the bankruptcy action began. And liquidating assets before the filing was often unworkable.

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Minister's Housing Allowance Again Declared Unconstitutional

The minister’s housing allowance provided by IRC § 107(2) has again been declared unconstitutional by the United States District Court for the Western District of Wisconsin. And this time it is likely that the United States Court of Appeals for the Seventh Circuit will rule on the merits of the challenge to this provision, rather than dismiss the case for lack of standing. The case is Gaylor  v. Mnuchin, No. 16-cv-215-bbc (W.D. Wisc. Oct. 6, 2017).

The case is the second bite at the apple for the Freedom from Religion Foundation (Foundation), which argues that the parsonage allowance is an unconstitutional establishment of religion in violation of U.S. Const. amend. I. In 2013, the same district judge, Barbara Crabb, ruled in favor of the plaintiffs and declared § 107(2) unconstitutional because it benefitted “religious persons and no one else. The Seventh Circuit, however, vacated the decision on the ground that the plaintiffs did not have standing to sue. In the first case, the plaintiffs had not been denied a claimed exemption. They stated on their return that they were “not clergy” and that their “employer is not a church,” but that they believed “it is unfair that ministers can exclude housing while we cannot.” This time, IRS disallowed their claim, with the final IRS response coming two months after the plaintiffs filed this second lawsuit.

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Facts