King v. Burwell : The U.S. Supreme Court Case
Challenging the ACA Subsidies in Federal Marketplaces
Who: Anyone receiving a subsidy through a federally established ACA health marketplace also called exchanges. Federally established marketplaces are in all states except:
*State run marketplaces using federal website
When: The Supreme Court justices will hear arguments on March 4, 2015 and likely rule by the end of June or early July 2015. Federal marketplace subsidies could end by the following month.
What: The legal challenge is to the 2012 IRS ruling that allows ACA subsidies for policies purchased in federally run marketplaces.
Executive Summary: The ACA specifies subsidies are available in "an Exchange established by the State…” In 2015, only 13 states and D.C are operating pure state run exchanges. Three (3) states use the federal website. 37 states use federal exchanges. About 6 million people were enrolled in the federal exchanges in 2014. 85 percent or 5.1 million received subsidies.
Against Federal Marketplace Subsidies
The law clearly restricts the subsidies to state exchanges. The IRS cannot unilaterally change legislation or provide subsidies without authorization by Congress.
For Federal Marketplace Subsidies
It was the intent of legislators to make subsidies available in all states. There are too many people with existing subsidies to eliminate them. And, “established by the State" should be interpreted as meaning government-run (federal or state) exchanges.
Potential Impact of Negative Ruling: Subsidies in federally run marketplaces will cease. State run marketplaces will continue to provide subsidies. Other states may consider building a state marketplace. States with federal marketplaces will be unable to impose the employer mandate penalties (because the penalties are triggered when someone without access to employer-based coverage receives subsidized coverage). The individual mandate would not apply, if the lowest-priced non-subsidized) coverage available costs more than 8 percent of their household income. Congress will need to move quickly to pass legislation creating a cost effective alternative or bridge for those losing subsidies.
Actions; Check with your agent or broker on the impact to your cost and coverage. If the Supreme Court rules in favor of federal marketplace subsidies, there will be no change. If the court rules against federal marketplace subsidies, individuals affected may be able to drop insurance altogether or buy otherwise non-qualified plans. In states affected, employers will not be subject to the employer mandate
The information presented and contained within this article was submitted by Ronald E. Bachman, President & CEO of Healthcare Visions and Chairman of the IHC Editorial Advisory Board. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations applicable to your company. Any opinions expressed within this document are solely the opinion of the individual author.