US Supreme Court Rules in Favor of Administration

Tax Credits Will Continue Through All ACA Exchanges

US Supreme Court building

Posted by Anne Phelps, Deloitte Advisory Principal, US Health Care Regulatory Leader on June 25, 2015.

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The United States Supreme Court today (June 25, 2015) ruled 6-3 in favor of the Administration to permit federal premium assistance tax credits under the Affordable Care Act (ACA) to continue to be made available in the 34 states that currently have federally-facilitated Exchanges, in addition to Exchanges established by the states, to help individuals purchase Exchange coverage. The Department of Health and Human Services (HHS) operates federally-facilitated Exchanges in states that have not established their own Exchanges under the ACA. Of the 7.3 million people who enrolled via ACA Exchanges in the open enrollment period for 2015 in states with federally-facilitated Exchanges, 87% were determined eligible for premium assistance tax credits1.

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What to look for in the Supreme Court decision in King v. Burwell

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Posted by Anne Phelps, Principal, US Health Care Regulatory Leader on May 27, 2015.

In June 2015, the Supreme Court is expected to issue a ruling in King v. Burwell, a case that challenges an important coverage provision of the Affordable Care Act (ACA). The ACA makes federal tax credits available to certain individuals to help them offset their premiums when they purchase health coverage on an insurance Exchange established by a state. If the state does not elect to establish an Exchange, the ACA charges the Secretary of Health and Human Services with establishing and operating one within the state. To date, 34 states have elected not to run insurance Exchanges of their own and have fallen back to the federal government. The Department of the Treasury, through a regulation issued by the Internal Revenue Service, has made the federal tax credits available to individuals who purchase health insurance on both state-run and federally-facilitated Exchanges.

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King v. Burwell: the Supreme Court as a catalyst

US Supreme Court building

Posted by Anne Phelps, Principal, US Health Care Regulatory Leader on February 27, 2015.

On March 4, 2015, the Supreme Court will hear arguments in King v. Burwell, a case that challenges an important coverage provision of the Affordable Care Act (ACA). The ACA makes federal tax credits available to certain individuals to help them offset their premiums when they purchase coverage on an insurance Exchange established by a state. If the state does not elect to establish an Exchange, the ACA charges the HHS Secretary with establishing and operating one within the state. The IRS has made the federal tax credits available to certain individuals who purchase health insurance on both state-run and federally-facilitated Exchanges through regulatory rules.

The major issue that the Supreme Court will determine is whether the IRS has the authority to make federal tax credits available to individuals who purchase coverage through the federally-facilitated Exchanges. To date, 34 states have elected not to run insurance Exchanges of their own and have defaulted to the federal government. If the Supreme Court invalidates the IRS rule, millions of Americans who are receiving tax credits through the federally-facilitated Exchanges would lose these subsidies.

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