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Compliance Corner: Subsidies Upheld by Supreme Court

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Today, the U.S. Supreme Court ruled to uphold the Affordable Care Act's subsidies for participants in federally-facilitated Marketplace/Exchange plans in King v. Burwell.


According to the ruling, "when read in context, the phrase 'an Exchange established by the State under [42 U.S.C. Section 18031]' is properly viewed as ambiguous. The phrase may be limited in its reach to State Exchanges. But it could also refer to all Exchanges -- both State and Federal -- for purposes of the tax credits.... The argument that the phrase 'established by the State' would be superfluous if Congress meant to extend tax credits to both State and Federal Exchanges is unpersuasive.... [T]he statutory scheme compels the Court to reject petitioners' interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very 'death spirals' that Congress designed the Act to avoid.... Petitioners' plain-meaning arguments are strong, but the Act's context and structure compel the conclusion that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid."

View court opinionfor official guidance

WHAT EMPLOYERS NEED TO KNOW: The ruling maintains the status quo.
Download King v. Burwell Report

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