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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







November 13, 2014


 Health and Welfare Law Alert




 Supreme Court to Rule on Affordable Care Act

Subsidy Challenge 




The U.S. Supreme Court will review the ruling in King v. Burwell on whether the Affordable Care Act's ("ACA's") premium subsidies extend to lower income individuals served by the Federal Insurance Exchange (or Marketplace).


Background. The ACA requires all non-exempt individuals to obtain minimum essential health coverage or pay a penalty. To encourage compliance, the ACA authorizes the IRS to provide health insurance premium tax credits (i.e., subsidies) to eligible individuals whose incomes are between 100 and 400 percent of the federal poverty level and who are not eligible for other minimum essential coverage. Subsidies are only available to individuals who purchase coverage through an insurance exchange.


The ACA contemplates that states will establish their own health insurance exchanges. When a state fails to establish its own exchange, the ACA authorizes the federal government to step in and operate an exchange for that state.


However, two sections of the ACA that describe the process for calculating the amount of the subsidies, and for determining what months can be covered by the subsidies speak of an individual enrolled in a qualified health plan "through an exchange established by the State." Under IRS regulations, subsidies are to be awarded to qualifying individuals whether they bought health insurance coverage through a state or federal exchange.


Prior Cases. In King v. Burwell, the plaintiffs argued that the ACA, as written, only authorizes a subsidy for insurance purchased through an exchange established by one of the states or the District of Columbia. Accordingly, the plaintiffs asserted that, in issuing the subsidy regulations, the IRS had interpreted the ACA too broadly by providing that subsidies are available for insurance purchased through the Federal Exchange. Therefore, the plaintiffs asked the Fourth Circuit to invalidate the portion of the IRS subsidy regulations that authorize subsidies for insurance purchased through a Federal Exchange.


The Fourth Circuit rejected the plaintiffs' argument and upheld the IRS's subsidy regulations, noting that the IRS's interpretation of the law was a permissible exercise of the agency's discretion. The court determined that the subsidies were essential to fulfilling the ACA's purpose and that Congress was aware of their importance when drafting the legislation. The court also found that the relevant provisions of the ACA were ambiguous and that the IRS had crafted a rule that ensured that subsidies were widely available. As a result, the court ruled 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.


In Halbig v. Burwell, the plaintiffs made the same arguments as those made by the plaintiffs in King. A three-judge panel for the Court of Appeals for the District of Columbia Circuit ruled in favor of the plaintiffs and invalidated the IRS subsidy regulations. In making this ruling, the majority ruled that the ACA only authorizes a premium subsidy for insurance purchased through state-level exchanges. Accordingly, the majority determined that the IRS had interpreted the ACA too broadly and ruled that the ACA does not authorize the IRS to provide a subsidy for insurance purchased through a federal exchange.


The Halbig decision, however, has been set aside while the full court reconsiders the issue.


Supreme Court's Review of King. In agreeing to review King, the Supreme Court must now determine how to interpret the legislative language chosen by Congress. In doing so, the Court will have to address the validity of the IRS regulations as well as the broader question of whether the words Congress chooses are to be the sole guide for what a law provides, or whether the larger purpose that Congress had in mind when crafting the law should determine how to interpret the words.


Interestingly, the Court typically grants review only where there is a split in the federal appeals courts. The lack of such a split, however, did not prevent the Court from granting review of the King case. The Court was apparently compelled to do so based on the challengers' assertion that the longer the subsidies continue to consumers who had gone to the Federal Exchange, the harder it would be to undo the program should the Court accept the challengers' interpretation.




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