Two Federal Appeals Courts Rule on Subsidies

July 21, 2014

Two federal appeals courts have recently issued contradictory rulings on whether individuals enrolling in health plans offered through Marketplaces run by the federal government are eligible for subsidies to help pay for their coverage.

 

The D.C. Circuit Court of Appeals ruled that subsidies could go only to individuals enrolled through Marketplaces established by states. The Fourth Circuit Court of Appeals (Richmond, VA) ruled that individuals enrolled through Marketplaces established by the federal government are eligible for subsidies.

 

It is important to note that these rulings do not impact Colorado - because Colorado has a state-based health insurance.  The case was a challenge centered on subsidies (tax credits) paid to residents of the 36 states on the federal exchange. The Obama Administration has already announced it is appealing the decision. The Appellate Court also ruled that subsidies will not stop while appeals are under way.

 

So what does this mean for states that don’t have a Marketplace?  For now, the IRS regulation remains in effect, and tax credits will continue. The dispute will most likely remain unresolved until 2015, given the time needed for further appeals. Insurers applying to offer coverage on federal Exchanges in 2015 will face significant uncertainties. Insecurity about tax credits will also make the next federal Exchange open enrollment very difficult for millions of consumers. (There is a potential for retroactive invalidation of the regulation, calling into question all tax credits provided in 2014 through the federal Exchanges.) 

 

Planning by employers for 2015 is also affected, since invalidation of the regulation could mean that employees residing in states with federal Exchanges could not trigger penalties for employers (because the employees would be ineligible for tax credits on those Exchanges). 

 

 

 

 

Please reload

Featured Posts

Open Enrollment Management

September 27, 2019

1/3
Please reload

Recent Posts

September 27, 2019

August 8, 2019

January 31, 2019

September 10, 2018

Please reload

Search By Tags
Please reload

Follow Us
  • Facebook Basic Square
  • Twitter Basic Square

© 2014 360benefits, Inc.

  • w-facebook
  • Twitter Clean
  • w-linkedin
TEL: 720.204.3019 | EMAIL: support@360benefitsonline.com