There are three subsidies lawsuits all charging the same basic concept: that subsidies are illegal unless a state has set up its health insurance marketplace. For example, Florida and Texas has a Federal Exchange; Nevada has a state exchange. This charge is based on the specific wording of the law which states subsidies are for health coverage obtained on the “Exchange established by the State under section 1311.” The law does not mention subsidies for health insurance if the state doesn’t setup an exchange at the time it was written it was assumed all states would establish an exchange. The IRS later clarified the subsidy rule publishing that this applied to the federal marketplaces as well. Lawsuits also charge that the IRS did not have the authority to do this and that the law should be interpreted as written.
If the suit leans toward the wording as written, this means states with Federal Exchange employees would not be eligible for a subsidy that means Employers may not have a penalty under the Employer Mandate.
The subsidies lawsuits include:
- King V. Burwell
- Halbig V. Burwell
- Pruitt V. Burwell
Interesting times.
Marsha Pfeffer, CSFS, ACBC, LUTCF, CHRS
Sr. Employee Benefits Advisor
marsha@corportatebenefitsnetwork.com
(727) 381-9288 x101