Supreme Court Agrees to Consider New Challenge to the Affordable Care Act

Those of you who attended our client seminar on the Affordable Care Act are aware that, notwithstanding the prior unsuccessful court challenge to the law, based on the obligation of individuals to buy insurance, there remains a serious challenge to the tax credit which is an integral part of this system.  The technical issue, as stated by the parties is this:

Section 36B of the Internal Revenue Code, which was enacted as part of the Patient Protection and Affordable Care Act ("ACA"), authorizes federal tax-credit subsidies for health insurance coverage that is purchased through an "Exchange established by the State under section 1311" of the ACA.
 

The question presented is whether the Internal Revenue Service ("IRS") may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through Exchanges established by the federal government under section 1321 of the ACA.

Ohio is one of the states where there is no state-created exchange, only the federal exchange.  If this argument were to ultimately prevail, individuals trying to buy insurance on the exchange would not be eligible to receive a tax credit; further, employers could not be penalized for not having insurance because that penalty is triggered by an employee receiving a tax credit.
 

We indicated at the seminar that this issue had been presented to the Supreme Court, and the briefs asking the Court to consider the issue were all filed and ready for the Court to rule upon – which could happen any day, or months away.  November 7, the Court agreed to accept the case for an actual decision on the merits.  This means that final briefs on the subject should now be filed within the next couple of months; and the Court may still issue a decision as soon as next summer. 

For more information about this advisory contact Stephen P. Bond or Daniel K. Glessner.

This Client Advisory is intended to provide information generally and to identify general legal requirements. It is not intended as a form of, or as a substitute for legal advice. Such advice should always come from in-house or retained counsel. Moreover, if this Client Advisory in any way seems to contradict advice of counsel, counsel’s opinion should control over anything written herein. No attorney client relationship is created or implied by this Client Advisory. © 2014 Brouse McDowell. All rights reserved.