Supreme Court Upholds Obamacare and Related Tax Subsidies

By: James D. Silverman, Esq.

On June 25, 2015, the U.S. Supreme Court upheld the current implementation of tax subsidies and coverage requirements in the Affordable Care Act (“ACA”) for individuals purchasing health insurance either from a state or federal exchange (marketplace).

Hotly contested in King v. Burwell was language in a portion of the ACA providing tax subsidies only to eligible persons buying health insurance from state-run exchanges. The Court interpreted this language as including exchanges established by the federal government.

The 6-3 ruling is the high court’s second in three years to preserve Obamacare.

Chief Justice Roberts wrote the majority opinion, joined by Justices Kennedy, Ginzburg, Breyer, Sotomayor, and Kagan. He said: “… when deciding whether the language is plain, the Court must read the words ‘in their context and with a view to their place in the overall statutory scheme.’” (FDA v. Brown & Williamson Tobacco Corp.) Roberts also wrote that “Congress does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions.”(Whitman v. American Trucking Assn.)

Justice Scalia, joined by Justices Thomas and Alito, dissented, saying, “Words no longer have meaning if an Exchange that is not established by the State is ‘established by the State.’”

The practical result of the Supreme Court decision is that:

1) Eligible individuals continue to have access to subsidies in all states, and the individual mandate to buy health insurance persists; and

2) Businesses must continue to offer health insurance to employees who work 30 hours a week or more, or pay a penalty.

Federal exchanges exist in at least 27 states, including Pennsylvania.

Leech Tishman monitors court decisions as well as laws and regulations that affect the cost of doing business, including the Affordable Care Act (ACA). Please feel free to contact us if you would like assistance with ACA-related matters or if you are interested in a consultation on employment issues or employee benefits (such as qualified retirement plans, welfare and fringe benefits, and executive compensation).

Jim Silverman is a partner in the Taxation and Employment Practice Groups in Leech Tishman’s Pittsburgh office.  Jim can be reached at 412.261.1600 or Learn more about Leech Tishman’s Employment Practice Group here.

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