On Nov. 7, 2014, the U.S. Supreme Court agreed to address the provision of premium tax credits through federally facilitated exchanges. Challengers claim PPACA’s express language authorized premium tax credits only through exchanges established “by the state.” Such an interpretation would disallow the provision of premium tax credits in any states that have refused to establish their own exchanges and instead defaulted to a federally-facilitated exchange. The IRS has interpreted that same section of PPACA to authorize premium tax credits in both state and federally facilitated exchanges because the federally facilitated exchanges are standing in the shoes of state exchanges. In King v. Burwell, 2014 WL 3582800 (4th Cir. 2014), the Fourth Circuit Court of Appeals ruled that ambiguity about premium tax credits in the law makes the regulation allowing premium tax credits in federally-facilitated exchanges a permissible exercise of agency discretion.
It is anticipated that the case will be argued in the spring with a decision expected toward the end of the Court’s current term in June 2015. This case is significant because premium tax credits are an essential part of PPACA. A finding that premium tax credits are not available through federally facilitated exchanges could cripple the law. Without premium tax credits, employer mandate penalties would have no trigger in those states.
On Nov. 12, 2014, the Court of Appeals for the District of Columbia Circuit decided to suspend their rehearing of Halbig, et al. v. Burwell, because the U.S. Supreme Court has decided to hear another challenge that addresses the same issue. The case will, therefore, be held in abeyance pending the Supreme Court’s decision in King v. Burwell.