In an earlier blog post this year, I discussed the King v. Burwell case and the possible ramifications if the United States Supreme Court did not uphold the Internal Revenue Service position that residents in states with either a state or federal Health Care Exchange are entitled to receive subsidies from the federal government to help pay for Health Care Exchange coverage. On June 25, 2015, in a 6-3 decision, the Supreme Court ruled that the federal subsidies are available in states with federal Health Care Exchanges as well as states with state Health Care Exchanges.
The Court did not rubberstamp the IRS’ position, but rather found that it was “the Court’s task to determine the correct reading of” the statute. Although it did not defer to the IRS’ earlier interpretation, the Court came to the same conclusion as did the IRS. In effect, the Court’s decision maintains the status quo. The impact of this decision is that individuals in all states will continue to be eligible for federal subsidies to help pay for coverage acquired through Health Care Exchanges and large employers in all states remain subject to penalties under Code Section 4890H if they do not offer health care coverage to a sufficient percentage of their full-time employees and their children.
This is the Supreme Court’s second ruling in three years to uphold the Health Care Reform Act.