King v. Burwell Decision is Out…So Now What?

The much awaited King v. Burwell decision came out this morning. In the ruling, the Supreme Court ruled 6-3 in favor of upholding federal exchange subsidies, preserving subsidies on which 8.7 million Americans depend to obtain affordable health care coverage through the federal exchanges.

According to Justice Roberts, a large influencer in the decision to uphold subsidies stemmed from the Court’s desire to prevent the potentially catastrophic impact of undoing subsidies in the 37 states that opted not to establish state exchanges.

A key note in the decision reads as follows.

“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.” [King v. Burwell, No. 14-114 (U.S. June 25, 2015]

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Justices Scalia, Alito, and Thomas comprised the three dissenting votes in the case.

So what does it all mean? In short, we can’t anticipate any changes to Obamacare in the foreseeable future, and can expect the regulation to continue to rollout as planned. Applicable Large Employers (50 or more full-time employees, plus full-time employee equivalents) can anticipate having to comply with the Employer Shared Responsibility Mandate reporting requirements come January 2016.

Related Blog: Everything You Need to Know About Obamacare 1095-C Reporting

If you’re just getting started in your ACA education, and potentially fall into the Applicable Large Employer pool, we recommend checking out our Obamacare Beginner Webinar.

For those looking to automate their compliance and need some guidance on evaluating different Obamacare software vendors, view our quick blog on What to Look for In an Obamacare Solution.