Friday, June 26, 2015

US Supreme Court Rules in Favor of ACA Subsidies

Dianne De La Mare

The U.S. Supreme Court issued its decision in King v. Burwell, finding in favor of the Obama Administration, and voting 6-3 to uphold the Affordable Care Act’s (ACA) subsidies in states that have a federally-run exchange. Specifically, the Court said that the Internal Revenue Service (IRS) was authorized to issue the ACA-related rule that extends tax-credit subsidies to individuals who purchase insurance through either a state- or federally-run exchange.

This means that the ACA is here to stay, at least for now. In other words, it is "business as usual" in all exchanges, whether those exchanges are state- or federally-run. Currently, 34 states rely on federally-run marketplaces. Another 13, plus Washington, D.C., have their own state-run exchanges, and three others have state marketplaces but use HealthCare.gov to determine subsidy eligibility.

The Court's decision clarifies that subsidies will continue to be available to any individual who purchases insurance through any exchange (state-run or federally-run), and earns between 100-400 percent of the federal poverty level. That means those individuals who previously had tax-credit subsidies in federal-run exchanges will keep those subsidies to the extent that they continue to satisfy the subsidy requirements. Those same individuals also will stay insured.

This also means that AHCA/NCAL members must continue to comply generally with the ACA requirements. As of January 1, 2015, all employers with at least 50 full time employees or a combination of full-time and part-time employees totaling 50 are required to comply with the Employer Shared Responsibility provisions found in the Internal Revenue Code, Section 4980H . If employers do not offer affordable health coverage that provides a minimum level of coverage to full-time employees (and their dependents), the employer may be subject to an Employer Shared Responsibility payment (e.g., a penalty).

To obtain more information go to AHCA’s website at http://www.ahcancal.org/facility_operations/affordablecareact/Pages/Employer%20Shared%20Responsibility%20Provisions.aspx.

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