Supreme Court Rejects Challenge to Affordable Care Act’s Tax Credit Provisions

06.25.2015

By: Patrick W. McGovern

On June 25, the U.S. Supreme Court, in a 6-3 decision, finally resolved a central issue under the Affordable Care Act (“ACA”) as to whether Congress’ failure to provide expressly for Federal subsidies to States that did not create their own health care Exchanges but opted for the Federal tax credits should prohibit payments of Federal tax credits to individuals who purchase their coverage from the Federal Healthcare Exchange. The Court held that despite the inartful drafting and ambiguities in the legislation, the Court would enforce what it viewed to be Congress’ intent in the legislation to have State and Federal Healthcare Exchanges work the same in every State, regardless of whether the State has its own Exchange or depends on the Federal Exchange. The Court reasoned that its job was to read the words of the statute “in their context and with a view to their place in the overall statutory scheme” and concluded that the ACA “indicates that State and Federal exchanges should be the same,” and therefore, tax credits must be available on both State and Federal Exchanges. In sum, the Court ruled that ACA tax credits are available under the State and the Federal Exchanges “to avoid the type of calamitous result that Congress plainly meant to avoid.” For questions related to this development or ACA generally, please contact Patrick W. McGovern, Esq., Director of the Employee Benefits Practice Group and Partner in the Labor Law Group, at pmcgovern@genovaburns.com, or Gina M. Schneider, Esq., a member of the Employee Benefits Practice Group and Counsel in the Labor Law Group, at gmschneider@genovaburns.com.

Tag: Affordable Care Act