United States Supreme Court Upholds the Affordable Care Act Subsidies

As we previously reported, one of the greatest challenges to the Affordable Care Act (“ACA” or “Act”) came in King v. Burwell, otherwise known as the Obamacare subsidy lawsuit, where the plaintiffs challenged the ACA subsidies issued by the IRS in States that use the federal exchange (www.HealthCare.gov) to offer health insurance rather than their own State-run exchanges. A ruling in the challengers’ favor would have dismantled the ACA by essentially causing its financial collapse. This near-collapse of the Act was avoided yesterday when the Supreme Court issued its opinion, upholding the subsidies and finding that Americans are entitled to keep the tax subsidies that help defray the cost of insurance.

In a 6-3 opinion, the Supreme Court agreed that subsidies were always meant to be distributed through both Federal and State channels, and that the goal of the law was to cover all Americans. The decision comes after the Court found, in National Federation of Independent Business v. Seleblius, that the individual mandate (the portion of the Act that requires Americans to buy health insurance or pay a penalty) was constitutional.


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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