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King v. Burwell, 576 U.S. 473, 135 S.Ct. 2480, 192 L.Ed.2d 483, 115 A.F.T.R.2d 2015-2203, 83 USLW 4541, 2015-1 USTC P 50,356, 15 Cal. Daily Op. Serv. 6700, 2015 Daily Journal D.A.R. 7180, Pens. Plan Guide (CCH) P 24017T, 25 Fla. L. Weekly Fed. S 430

Facts

The case involved four Virginia residents who did not want to purchase health insurance and argued that they should not receive tax credits because Virginia's exchange was not established by the state. They contended that this would make their insurance costs exceed eight percent of their income, exempting them from the ACA's coverage requirement. However, the IRS rule allowed tax credits for insurance purchased on both state and federal exchanges, which would subject them to the coverage requirement.

Petitioners are four individuals who live in Virginia, which has a Federal Exchange. They do not wish to purchase health insurance. In their view, Virginia's Exchange does not qualify as 'an Exchange established by the State under [ 42 U.S.C. § 18031 ],' so they should not receive any tax credits.

Issue

Whether the ACA's tax credits are available to individuals who enroll in health insurance through a federal exchange rather than a state exchange.

The issue in this case is whether the Act's tax credits are available in States that have a Federal Exchange rather than a State Exchange.

Rule

The Supreme Court held that the IRS interpretation of the ACA, which allowed tax credits for insurance purchased on federal exchanges, was valid and that the ACA's provisions were ambiguous regarding the availability of tax credits.

The Supreme Court, Chief Justice Roberts, held that: 1 Supreme Court would not give Chevron deference to IRS interpretation of ACA, and 2 ACA authorized tax credits for health insurance purchased from federally-established exchanges.

Analysis

The Court determined that the phrase 'an Exchange established by the State' was ambiguous and could refer to both state and federal exchanges. The Court emphasized that the tax credits were essential for the ACA's reforms to function effectively and prevent destabilization of the insurance market. The Court rejected the petitioners' interpretation, which would lead to adverse selection and undermine the ACA's goals.

Conclusion

The Supreme Court affirmed the Fourth Circuit's decision, holding that tax credits are available for health insurance purchased on federal exchanges, thereby upholding the IRS rule.

The Supreme Court ultimately affirmed the lower court's decision, ruling that tax credits are available for individuals in states with federal exchanges.

Who won?

The government prevailed in the case, as the Supreme Court upheld the IRS's interpretation of the ACA, allowing tax credits for federal exchanges. The Court reasoned that the tax credits were crucial for the ACA's effectiveness and that the statutory language was ambiguous.

The government prevailed in the case, as the Supreme Court upheld the IRS's interpretation of the ACA, allowing tax credits for federal exchanges.

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