A US appeals court ruled against Obamacare subsidies for policies issued through the Federal Health Exchanges. In the case, Halbig v. Sebelius, 14-5018, the U.S. Court of Appeals for the District of Columbia ruled that the Affordable Care Act’s legislative language “limits the availability of premium tax credits to state-established exchanges”. However, in a related case, the Virginia court of appeals panel unanimously upheld the IRS’s right to provide subsidy for both Federal and State based exchanges. The issue will eventually make its way to the US Supreme Court for a final decision.
Only 14 states including Idaho, Washington, and the District of Columbia opted for their own state exchange marketplaces. If the DC ruling is upheld then it would remove the premium subsidies on more than 5 million Americans who purchased insurance through the Federal Exchange. Without the significant premium reductions provided by the subsidies it is likely that most would then lose their medical insurance coverage.
The DC ruling is likely to be appealed by the Obama administration so the final impact is not yet known. In the meantime, it appears that the Americans who purchased their health insurance through State Health Exchanges would keep their premium subsidies regardless. It is yet unclear if Idaho, that issued their policies through a Federally Assisted State Exchange in 2014 would be considered a State Exchange. Idaho expects to have their own exchange, Your Health Idaho, in full operation for the next open enrollment period beginning on November 15, 2014 for policies effective on or after January 1, 2015.
Read more about it in two Bloomberg stories published by Insurance Journal Court Rules Against Obamacare Subsidies for Federal Exchange Insureds and Same Day, Different Court Obamacare Subsidies Upheld.
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