DC Circuit Court ruling against ACA individual subsidy could lead to Supreme Court Appeal

July 22, 2014 – Sacramento CA. The U.S. Court of Appeals for the D.C. Circuit released a 2-1 decision today in the Halbig v. Burwell case determining that the IRS and the federally facilitated exchange marketplace was not authorized to distribute premium tax credit subsidies to individual exchange consumers. The court determined that the Patient Protection and Affordable Care Act (PPACA) unambiguously restricts the availability of subsidies to insurance purchased in state-based exchanges, and that the IRS regulation acted outside of the parameters of the PPACA by making available subsides via the federally facilitated and partnership exchanges.

According to the Sacramento Association of Health Underwriters’, Carolyn Lewis, “While this decision could eventually have huge ramifications for the health reform law, it is very important to note that the ruling does not change anything regarding the distribution of subsidies or cost-sharing assistance, the operation of the federally facilitated exchanges or enforcement of the employer mandate for the time being.” In making its ruling, the D.C. Circuit Court made a very specific decision not to immediately block subsidies, acknowledging that their decision will be appealed right away.

Ben Conley, an ACA expert and attorney at Chicago law firm Seyfarth Shaw said today that “the DC court ruling broke down along political lines, and it is likely that the expected appeal to the full court will reverse today’s decision.” He went on to predict that “if the ruling is appealed again, the issue could end up in the Supreme Court as early as next June 2015. If the federal exchange subsidy is struck down, that will essentially gut the ACA employer mandate/penalty in all the states where federal exchanges currently operate.”

Today’s ruling could affect up to 4.7 Americans who enrolled in the new healthcare program. The average premium increase for people enrolled once subsidies are removed is expected to be upwards of 76% according to a recent study by Avalere Health.

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The Sacramento Association of Health Underwriters (SAHU) is a local chapter of the California Association (CAHU) and the National Association (NAHU). Our vision is that every American will have access to solutions for health, financial and retirement security, as well as the services of insurance professionals to assist in navigating these areas. SAHU’s mission is to improve our members’ ability to meet the health, financial and retirement security needs of all Americans through education, advocacy and professional development.