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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.






Contact Info

The Wagner Law Group


  Integrity | Excellence


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104







July 24, 2014


 State and Federal Law Alert




Conflicting Rulings on PPACA Premium Subsidies 




Two federal appeals courts have issued conflicting rulings on whether the Patient Protection and Affordable Care Act ("PPACA") permits the federal government to provide health insurance premium tax credits for consumers in the 36 states that have federal insurance exchanges rather than state operated exchanges. The rulings do not affect the 14 states and Washington D.C., which maintain their own insurance exchanges.


Background. PPACA requires all non-exempt individuals to obtain minimum essential health coverage or pay a penalty. To encourage compliance, PPACA authorizes the IRS to provide health insurance premium tax credits to eligible individuals whose incomes are between 100 and 400 percent of the federal poverty level. Premium tax credits are, however, only available to individuals who purchase coverage through the insurance exchanges.


PPACA contemplates that states will establish their own health insurance exchanges. However, when a state fails to establish its own exchange, PPACA authorizes the federal government to set up and operate an exchange for that state.


Two sections of PPACA (that describe the process for calculating the amount of the premium tax credits and determining what months can be covered by tax credits) provide that the tax credits are available for an individual enrolled in a qualified health plan "through an exchange established by the State." IRS regulations, however, allow premium tax credits to be awarded to for health insurance coverage purchased through both state and federal insurance exchanges.


Halbig v. Burwell. In Halbig v. Burwell, a three-judge panel of the Court of Appeals for the District of Columbia invalidated the IRS regulations.


In making this ruling, the majority observed that PPACA only authorizes a tax credit for insurance purchased through an exchange established by one of the fifty states or Washington, D.C. The majority next determined that the IRS had interpreted PPACA too broadly to authorize the tax credits for insurance purchased through an exchange established by the federal government. Accordingly, the majority ruled that a federal exchange is not an "exchange established by the State" and, as such, PPACA does not authorize the IRS to provide tax credits for insurance purchased through a federal exchange.


King v. Levy. In King v. Levy, the Court of Appeals for the Fourth Circuit upheld the IRS's premium tax credit regulations, because the authorization of these tax credits is a permissible exercise of the agency's discretion.


In reaching this determination, the court noted that it is clear the tax credits are essential to fulfilling PPACA's purpose and that Congress was aware of their importance when drafting the legislation. The court also observed that the relevant provisions of PPACA regarding the tax credit were ambiguous and that the IRS crafted a rule that ensured the tax credits' broad availability. As a result, the court determined that the IRS's regulations were a permissible interpretation of the ambiguous provisions and that it must defer to the IRS's regulatory authority to make such interpretations.


The decision in Halbig is to be reexamined by the entire District of Columbia court and, should it uphold the prior decision, this issue may make its way to the U.S. Supreme Court. In the meantime, the Obama Administration has stated that it will continue to provide tax credits in states that have federally operated exchanges.




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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.


This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.