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Healthcare in the News: King vs. Burwell
The Supreme Court of the United States will soon be making a decision on a case that could affect millions of people. The case of King vs. Burwell will decide whether those who use the federal marketplace to buy their health insurance will be allowed to receive a subsidy.
The Background of King vs. Burwell
On March 4, 2015 the Supreme Court of the United States heard King vs. Burwell, a case challenging the availability of Affordable Care Act premium subsidies in states with a federally run marketplace. The law provides for advanced payment of premium tax credits for people with incomes between 100 to 400 percent of the federal poverty level, and cost sharing reductions for people with incomes 100 to 250 percent of the federal poverty level.
In implementing its regulations, the Internal Revenue Service interpreted the ACA to authorize premium subsidies for individuals who purchase coverage on all marketplaces. The King vs. Burwell petitioners are challenging the legality of the IRS regulation allowing premium subsidies in states with a federally run marketplace.
The Two Sides
The controversy of this case lies in the wording of the ACA provision that amends 36B of the Internal Revenue Code “the premium subsidy amount is based on the cost of the qualified health plan…enrolled in through a Marketplace established by the State under 311 of the [ACA].”
The petitioners (King) want the Supreme Court to strike down the IRS regulation making subsidies available to individuals who purchase health plans in a state with a federally run marketplace. Their argument is that the IRS lacks the authority to issue this rule because they contend the ACA’s language is clear that these subsidies only are available in state-based marketplaces.
The respondents (Burwell) of this case are federal agencies charged with implementing the ACA. The federal government wants the court to uphold the IRS’s regulations making subsidies available in states with a federally run marketplace. The federal government argues that the IRS’s rule is consistent with the language of the ACA because a marketplace “established by the state” also means one established by the Department of Health and Human Services standing in as a surrogate for the state.
What the Future Could Hold
The Supreme Court’s decision could affect the number of people who ultimately have access to affordable coverage under the ACA.
- If King wins: If the IRS rule is overturned by the Supreme Court, people in 34 states would lose access to subsidies. Overturning the IRS rule also would essentially nullify the requirement that large employers offer coverage to full time employees in these states. The applicability of the employer mandate is dependent upon the premium subsidies because the associated tax is triggered when one of an employer’s full time workers receives a subsidy. If there are no subsidies, then an employer would never be subject to the tax for failure to comply with the employer mandate.
- If Burwell wins: If the Supreme Court upholds the IRS rule, subsidies will continue to be administered through all marketplaces.
The Supreme Court will be making a decision near the end of June, 2015.
What IAA has to Say
Health coverage is not only important to those who have a chronic illness, but it is also vital to maintaining a healthy workforce. Insurance Administrator of America wants you to have healthy and active employees.
For businesses who do not have health coverage for their workers, IAA has introduced many companies to self-funded healthcare plans. IAA works with you to design a program, pay and manage claims, establish a provider network, and obtain stop-loss coverage. Remember, with IAA one call does it all.
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