Global Tax Insights
ACA Victory over Supreme Court ChallengeJune 26, 2015
Supreme Court rules that subsidies will remain available to all Americans regardless of where they live.
On Thursday, June 25, 2015 the U.S. Supreme Court ruled that the premium tax credits under Code Sec. 36B are open to all qualified Americans, regardless of residency. The 6-3 vote held Thursday morning in the King vs. Burwell case marks an encouraging improvement in the lives of millions of Americans who will now be able to receive the benefits of the Affordable Care Act.
Supreme Court Challenge
Challengers in the King vs. Burwell case argued that the federal exchange, Healthcare.gov is not legally authorized to distribute Obamacare tax credits to Americans in the low and middle class income range. The plaintiffs argued that:
- The IRS clause stating that subsidies should only be available to those in the state-established exchanges means that any subsidies offered to residents of federal exchange states are illegal.
- Congress’s aim was to limit the subsidies to solely state exchanges.
The Court’s Decision
Defendants argued that the challenge against the ACA was based on such a technicality and therefore was neither warranted nor necessary. The decision in the case ensures that the Affordable Care Act remains unchanged and that millions of Americans will continue receiving subsidized coverage from the government. The court affirmed that subsidies should continue to be available to states that have their own health insurance exchanges, and also to states where the federal government exchange is exclusively relied on. The decision will protect nearly 6.5 million consumers in 34 states.
The Future of Obamacare
The ACA has officially made it through its second major hurdle. Even though there are a few more legal obstacles facing Obamacare, for now it seems to be here to stay.
Questions? Contact any member of our Healthcare Services Group.