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U.S. Court Rulings Regarding Affordable Care Act

On July 22, 2014, two federal appeals panels issued conflicting rulings regarding the use of federal tax subsidies to purchase private health insurance through the federal insurance marketplace. A panel in Washington D.C. ruled that subsidies could not be used to purchase insurance on the federal exchange site,

A couple of hours later, the 4th U.S. Circuit Court of Appeals panel ruled in a different case that the subsidies are legal for people who buy plans on The conflicting rulings set the stage for the cases landing before the U.S. Supreme Court. The stakes are high because operates in 36 states that do not operate a state exchange.

If the subsidies are not legal, the employer mandate (requiring employers to offer insurances to workers or pay a penalty) would be eliminated in the 36 states. This is because the employer mandate, requiring employers with 50 or more full-time workers to offer affordable insurance or face fines, only kicks in if one of their workers buys subsidized coverage on the federal exchange,

The central issue in the conflicting opinions is whether the plain language of the Affordable Care Act, specifying that subsidies could be used on the state exchanges should be interpreted literally or whether Congress intended the spirit of the Affordable Care Act to include subsidies on the federal exchange.

With approximately 4.7 million Americans qualifying for a subsidy, if the D.C. appellate ruling determine the subsidies used to purchase insurance on the federal exchange is not reversed, many of these new policyholders may cancel their insurance because they find it to be unaffordable without the subsidy. President Obama has indicated that he intends to ask the full U.S. Court of Appeals for the District of Columbia Circuit to reverse the panel’s decision. If they decline to do so, the U. S. Supreme Court would likely take cert.

For additional information, please read the attached article or contact one of our healthcare lawyers.

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