The Court of Appeals for the District of Columbia just released its decision in Halbig v. Burwell. This case is a big big deal, since it addresses whether subsidies are only legally available through the state-run exchanges or both the federally-run and state-run exchanges. This particular court has ruled that the subsidies are available only through the state-run exchanges. Others have ruled the opposite way. The implications of this issue are enormous for employers, because employer penalties are only triggered if an employee gets a subsidy. If there is no subsidy, there will be no employer penalty.

I am convinced, that this decision will be appealed. The appeal can be to the full Court of Appeals (this decision was made by just three of the eleven judges – to allow the court to hear more cases it is common for “panels” of just a few judges to hear cases) or directly to the Supreme Court. It is our understanding while this case is appealed, the decision will not be enforced, subsidies and potential employer penalties will continue.

If the appeal is to the full Court of Appeals, there could be a decision late this year. If it goes to the Supreme Court (which seems likely whether or not it goes to the full Court of Appeals first) this will not be resolved until approximately June of 2015 or possibly even June of 2016. Employers in states with federally run exchanges should not, therefore, assume that penalties are off the table.

We will keep you posted.

Marsha Pfeffer, CSFS, ACBC, LUTCF, CHRS
Sr. Employee Benefits Advisor
Corporate Benefits Networkwork, Inc/The Stoner Organazation
marsha@corportatebenefitsnetwork.com
(727) 381-9288 x101