Sharp Questions Dominate Supreme Court Oral Arguments Regarding the Challenge to the Availability of ACA Premium Tax Credits

McDermott Will & Emery
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On March 4, 2015, the Supreme Court of the United States heard oral arguments in King v. Burwell, the highest profile challenge to the Affordable Care Act (ACA) since the Supreme Court’s 2012 decision to uphold the law. The oral arguments featured sharp questioning of both sides. A decision is anticipated in June to determine whether the high court will maintain the status quo with respect to the availability of premium tax credits to lower -income exchange customers in all states.

The Issue -

The plaintiffs in King seek to invalidate a May 2012 Internal Revenue Service (IRS) rule providing that health insurance premium tax credits will be available to all taxpayers nationwide, regardless of whether they obtain coverage through state - based exchanges or federally funded exchanges (FFEs). The plaintiffs argue that the plain language of the ACA limits the availability of premium tax credits to health care insurance plans purchased through state exchanges. Only 13 states and the District of Columbia have established state exchanges for 2015; the other 37 states will use FFEs in 2015. The plaintiffs’ argument is based on statutory language providing that premium tax credits are available only for health care plans that are “enrolled in through an Exchange established by the State under section 1311 of the [ACA].

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