The University of Missouri will stop providing subsidies to itsgraduate students to help them buy health insurance due to an IRSrule linked to the Patient Protection and Affordable CareAct.

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While the PPACA levies a $2000-per-employee fine on largeemployers who do not provide health insurance for workers, a recentIRS interpretation of the legislation determined that employers aresubject to even greater fines if theyoffer cash to employees in lieu of insurance. Those employers canbe fined $100 a day—or up to $36,500 a year.

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Facing the prospect of such heavy fines, the university willstop helping students pay for health care.Instead, it will direct the money towards fellowships to help gradstudents pay for tuition, books, housing and otherexpenses.

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"Because we are prohibited by law from linking this money tohealth insurance in any way, we are unable to ask students whetherthey need health insurance or plan to purchase insurance," theuniversity said in a statement posted on its website.

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In the past, the university only provided the money to the 70percent of students enrolled in the student insurance plan. Becausethe money will now be available to all graduate students, theamount distributed to each student will be significantly lower,dropping from a maximum of $3,051 to a maximum of $1,240.

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“We’re trying to comply with the interpretation of federal law,”Leona Rubin, vice chancellor of graduate studies, told theWashington Times. “We’re not trying to hurt (students).”

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Unlike the provision of the PPACA that fines employers thatdon't provide employees with insurance, the fines for employersoffering workers rebates to buy insurance does not include anexemption for small businesses. As a result, the NationalFederation of Independent Business is lobbying hard for Congress to craft asimilar exemption.

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