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BREAKING NEWS

Courtesy of BusinessInsurance.com

Supreme Court to review case on federal health exchange premium subsidies

November 7, 2014 - 2:14pm
Jerry Geisel
businessinsurance.com

The U.S. Supreme Court on Friday agreed to decide whether health care reform law premium subsidies are available to the millions of uninsured Americans obtaining health care coverage through federal insurance exchanges.

At issue is the validity of 2012 Internal Revenue Service regulations that said the premium subsidies would be available to eligible beneficiaries purchasing coverage in state or federal exchanges.

Two appeals court panels have split on the legality of the IRS rules. In July, a three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia ruled that the law is explicit that the subsidies only are available for coverage if purchased through state exchanges.

Yet on the same day, a three-judge panel of the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, said the IRS interpretation of the ACA to permit subsidies for coverage obtained in federal as well as state exchanges was correct.

If premium subsides were limited to state exchanges, “the economic framework supporting the (health care reform law) would crumble if the credits were unavailable on federal exchanges,” the appeals court ruled.

Of the 8 million individuals who enrolled in health insurance exchanges through the end of March, 2.6 million received coverage in state exchanges and 5.4 million received coverage in federal exchanges, according to the U.S. Department of Health and Human Services. In both state and federal exchanges, about 85% of enrollees received ACA-authorized premium subsidies.

The Supreme Court made its decision to review the 4th Circuit ruling without waiting for a decision by the full D.C. Circuit, which earlier agreed to review its three-judge panel's decision striking down premium subsidies in federal exchanges.

A Supreme Court ruling in the premium subsidy issue will be the second time the high court has taken up the Patient Protection and Affordable Care Act. In 2012, the high court in a 5-4 decision, upheld a provision in the law that requires individuals to obtain health insurance coverage or be liable for a financial penalty.