Supreme Court Rules in Favor of Defendants in King v. Burwell

Breaking: Supreme Court Rules in Favor of Defendants in King v. Burwell

Today, the U.S. Supreme Court Justices surprisingly ruled 6-3 in favor of the defendants in the case of King v. Burwell. For most of us, it now becomes business as usual in our post ACA world. In fact, this case will most likely be the last significant challenge to the law; as a result, the remaining components of the Affordable Care Act (ACA) will continue to be implemented through 2018 when the Cadillac Tax takes effect.

In the ruling, Chief Justice John G. Roberts wrote for the majority, which included Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan. Justice Antonin Scalia wrote the dissent, which included Justices Samuel Alito and Clarence Thomas.

Justice Roberts “acknowledged plaintiffs’ contention that the language in the statute is ambiguous, but nevertheless said their interpretation of the law would destabilize the individual insurance market in any State with a Federal Exchange.”

He further stated:

The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation, but those requirements only work when combined with the coverage requirement and tax credits. It thus stands to reason that Congress meant for those provisions to apply in every State as well.

In the dissent, Justice Scalia wrote that, “We should start calling this law SCOTUScare.”

At BenefitMall, we remain committed to working with regulators, Congress and our elected leaders to ensure a continued role for agents and Brokers. Recently, many reports have noted that the success of the Exchanges are a direct result of Broker and agent participation. To read more about Broker involvement, click here.

Background

In King v. Burwell, the U.S. Supreme Court Justices decided whether or not subsidies should be limited to state-run Exchanges. The key question in this legal action dealt with the IRS Rule that states that “subsidies are allowed whether the exchange is run by a state or by the federal government.” 

Two lower courts, the U.S. Court of Appeals for the District of Columbia in Halbig v. Burwell and the U.S. Court of Appeals for the Fourth Circuit in King v. Burwell, issued conflicting opinions regarding the IRS’s authority to administer subsidies in federally-facilitated Exchanges (although the Halbig decision was docketed for en banc review). The appellants in the King v. Burwell case said that IRS rule conflicts with the statutory language set forth in the ACA, which limits subsidy payments to individuals or families that enroll in the state-based Exchanges only. If the Court had relied on a literal interpretation of the ACA’s language, millions of Americans who live in more than half of the states where the federal Exchange operates would not receive subsidies, thus undoing a fundamental pillar of the law. 

Stay Tuned

Stay tuned as we continue to discuss the implications of this Supreme Court Decision, as well as any other issues affecting Brokers.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.