Understanding Halbig v. Burwell – Can I Still Collect a Health Insurance Subsidy?

We recently learned the outcome of an important legal case with potential implications for health insurance reform.

At issue in Halbig v. Burwell was whether or not the language in the Affordable Care Act (in the law itself) gives the IRS and the federal health insurance exchange the authority to distribute premium tax credits to individual policyholders.

The argument is that the law states subsidies are available for policies purchased in state-based — not federal — exchanges.

On July 22, the U.S. Court of Appeals for the D.C. Circuit ruled that, in fact, the IRS and the federal marketplace do NOT have the authority to distribute subsidies.  (Click here to read the full ruling.)

However, because the decision is certain to be appealed, and because a similar case was decided in Richmond on the same day, in which the court ruled the IRS did act correctly in allowing subsidies on the federal exchange, no action will be taken; the Circuit Court ruling will not be enforced — for the time being.  We can expect to see this issue come up again, perhaps even appearing on the 2015 Supreme Court docket.

What does Halbig v. Burwell Mean Right Now?

In essence, there will be no changes, at least for the time being, in how anyone — in any state — buys, pays for, uses, selects, or accesses health insurance.  Specifically:

• The federal health insurance exchange (through which Virginia residents can get coverage) remains fully operational, and we can continue to help our clients obtain coverage in the marketplace.  (Note, the Maryland and DC exchanges were also not impacted by this ruling.)
• No changes are planned for the calculation or distribution of premium subsidies or other cost-sharing relief.  If you are receiving subsidized coverage, you will continue to do so for as long as you remain eligible.
• If a future ruling does strike down subsidies, it is unlikely you will need to repay any subsidy amount you received, provided you were legally eligible for the subsidy when you received it.
• Open enrollment for 2015 plans is on schedule to begin on November 15, 2014.
• Special enrollment period rules are still in place.
• There has been no change to either the individual mandate or the employer mandate.

Business as Usual for Virginia Medical Plans

It is business as usual for us!  We will continue to stay abreast of any new rulings or changes.  And, as always, contact us if we can be of assistance.  Reach us by phone 1-800-867-0800 or email jkatz@vamedicalplans.com.