March 5, 2015

U.S. Supreme Court Hears Arguments in a Case Concerning Affordable Care Act Subsidies

Yesterday, the U.S. Supreme Court heard arguments in King v. Burwell, a case that generated a great deal of publicity because it concerns whether federal subsidies are available in states that adopt a state Exchange, participate in the federal Marketplace or both. Petitioners allege that the statute only allows subsidies in state-based Exchanges, not in the federal Marketplace. Questions raised by the justices suggest they are divided on the question, which involves both interpretation of the Affordable Care Act and the relationship between the federal government and the states. The Court is unlikely to hand down its decision until late in the session, which is currently scheduled to end June 29, 2015.

The implications for employer-sponsored plans are significant. Ramifications involve the legality of subsidies for eligible individuals and whether an employer penalty would be triggered if one or more full-time employees receives subsidized coverage in an Exchange. This is especially problematic in states where the federal government runs the Exchange, and where no subsidies would be available.

If you have any questions, please contact your Segal consultant or send us a note.

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