When the Affordable Care Act (ACA) went into effect, a series of changes rolled out across the nation. Beginning in 2014, a mandate requires each state to provide an Exchange for individuals and small business to purchase private health insurance.
However, because Congress cannot require states to implement federal laws, the ACA created the option for the Department of Health and Human Services (HHS) to create Federally Facilitated Exchanges (FFEs) for those states without their own Exchanges.
The government also provides subsidies to help individuals and small businesses purchase insurance through the Exchange. These subsidies are designed to lower out-of-pocket expenses in the form of either premium tax credits and cost-sharing.
Several different lawsuits have been filed by both employers and individuals to challenge the federal government’s ability to offer subsidies in states without their own Exchanges. On July 22, 2014, two federal appeals courts issued opposing rulings regarding FFE subsidy availability:
- In Halbig v. Burwell, the D.C. Circuit Court ruled that the IRS cannot authorize subsidies in states with FFEs, claiming that the ACA restricts subsidies to states with their own state-run Exchanges.
- In King v. Burwell, the 4th Circuit Court upheld the availability of subsidies both in states with and without their own Exchanges.
In response to these conflicting rulings, the current administration has decided that subsidies will continue to be offered in all states – even those with FFEs.
So, what does all this mean for you? To learn more about the details of this issue and how it may affect you in the future, take a look at the article below.
For more information on the Affordable Care Act, call a team member at ERM Insurance Brokers in Irvine, CA! (949) 222 – 0444