Smart Benefits: Supreme Court Will Hear Health Insurance Subsidy Challenge

Monday, November 10, 2014
Amy Gallagher, GoLocalWorcester Business/Health Expert

In the coming months, the U.S. Supreme Court will hear a challenge filed by four Virginia residents over the ACA tax credits awarded in 36 states that subsidize health insurance purchased by people on federal exchanges.

At issue is a four-word phrase in the law that says people qualify for tax credits when they buy insurance in an exchange “established by the state.” Only 14 states have set up their own exchanges; the rest have federal government-run ones.

The question is whether people can collect the subsidies even if they buy policies on a federal exchange. The IRS has ruled that tax credits are allowed whether the exchange is run by a state or by the federal government. The Obama administration says the IRS approach is consistent with the law’s aims, but the challengers say it is at odds with the law.

A Supreme Court ruling against the administration would mean that more than half of the 7.3 million people who have bought Obamacare policies aren’t entitled to the subsidies they are receiving.

The court is expected to reach a decision in June.

Amy Gallagher has over 21 years of healthcare industry experience guiding employers and employees. As Vice President at Cornerstone Group, she advises large employers on all aspects of healthcare reform, benefit solutions, cost-containment strategies and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, and is often quoted by national publications on the subject matter. Locally, Amy is a member of SHRM-RI, the Rhode Island Business Group on Health, and the Rhode Island Business Healthcare Advisory Council.