Two circuit courts have come to different conclusions regarding a key component of the Patient Protection and Affordable Care Act (“PPACA”): whether subsidies are available for coverage on the exchanges run by the federal government or only for those exchanges run by the states. The conflicting opinions set up a classic situation where the Supreme Court will likely be called on to resolve the difference in the circuits.
The ultimate conclusion could potentially cause many employers to rethink their plans—if the exchanges are no longer viable without the subsidies, employer-provided coverage becomes that much more valuable.
In Halbig v. Burwell, the District of Columbia Circuit Court of Appeals held that the plain language of the statue was clear: that subsidies are available for the purchase of insurance via exchanges “established by the state.” The majority felt it would be absurd for the IRS to interpret the language in a manner that would allow federal exchanges to provide subsidies.
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On the other hand, in King v. Burwell, the Fourth Circuit Court of Appeals held just the opposite: that the language was ambiguous and the IRS interpretation could be supported to include subsidies for those federal exchanges.