Keep an eye on King v. Burwell
Posted On: 6-1-2015 | Posted By: Debbie Mathes, CPA
The United States Supreme Court heard oral arguments this spring in a case that some consider the most significant challenge to the Affordable Care Act – King v. Burwell. A decision in favor of the plaintiffs wouldn’t necessarily mean the death knell of the ACA, but it would cause some significant uncertainty for many, including employers. Here’s what you need to know about this case and how it could affect you.
The central issue of King v. Burwell
The plaintiffs in King v. Burwell argue that the ACA specifically reserves the premium assistance credits for those enrolled in health care exchanges established by the states, and those enrolled in health care exchanges established by the federal government are not eligible for the credits.
After the ACA became law, only 16 states established exchanges – the other 34 chose not to do so, and the federal government set up the exchanges in those states. The Obama administration issued an interpretive rule through IRS regulations that made the premium assistance credits available to those enrolled through federally operated exchanges as well as the state exchanges. The plaintiffs in King v. Burwell believe the IRS overstepped its powers in doing so.
The impact of the decision
A decision in this case is expected in in the next several weeks. If the Supreme Court agrees with the plaintiffs, the credits would no longer be available to residents in those 34 states. That would put the individual and employer mandates, which are dependent upon the availability of premium assistance credits, in jeopardy. Either the states would need to set up their own exchanges or Congress would need to amend the ACA law to allow provision of premium assistance credits to residents of any state.
A decision in favor of the government, meanwhile, allows the IRS to continue providing the premium assistance credits through state and federal exchanges.
What this means for employers
No matter whether an employer is an “applicable large employer” that must provide affordable health insurance or a small business with employees obtaining insurance through a SHOP exchange, a decision in favor of the plaintiffs will have a significant impact.
Uncertainty regarding the outcome of the King v. Burwell case and the subsequent fallout is high, but the best thing you can do right now is to stay informed on this issue. We will provide additional updates as they become available, or you can contact your WK advisor if you have questions.