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In a proposed regulation, federal agencies suggest a rule that would require employer-sponsored group health plans to provide plan enrollees with estimates of their out-of-pocket expenses for services from different health care providers. Plans would make this information available through an online self-service tool so enrollees could shop and compare costs for services before receiving care.
Comments are due by Jan. 14, 2020, on the transparency-in-coverage rule issued by the departments of Health and Human Services, Labor and the Treasury. The unpublished rule was released on Nov. 15, when the agencies also posted a fact sheet summarizing the proposal.
Some feel that the rule, if finalized, would be the most dramatic expansion of disclosure obligations for group health plans since the ERISA was passed in 1974.
The proposal is part of the Trump administration’s attempt to create price competition in the health care marketplace. It follows the November release of a final rule requiring hospitals to publish their prices online for standard charges, including negotiated rates with providers. That rule, to take effect Jan. 1, 2021, is expected to be challenged in court by hospital industry groups.
The new proposal would apply to all health plans except those that are grandfathered under the Affordable Care Act. Among other obligations, group health plans and health insurance carriers would be required to do the following:
Information about employees’ out-of-pocket expenses and cost-sharing under employer plans is already disclosed in pre-service and post-service benefit claim determinations. However, “the proposed rules would take these disclosure requirements a step further by requiring individually tailored cost estimates prior to the receipt of services,” noted Susan Nash, a partner at law firm Winston & Strawn in Chicago.
While transparency in health care pricing is generally welcomed by employers, she observed, “employers may balk at the cost of preparing the online or mobile app-based cost-estimator tools, or purchasing such tools from vendors.”
In addition, because much of the information required to be disclosed is specific to the participant and the benefit option in which the participant is enrolled, the disclosures “will require greater coordination among employers and third-party administrators, pharmacy benefit managers, [and] disease management, behavioral health, utilization review, and other specialty vendors and will require amendments to existing agreements,” Nash explained.
The rules around public disclosure will likely be opposed by health insurance carriers who view their price negotiation as confidential and part of the service that they provide as carriers, and insurers are likely to challenge them in court, as hospital systems are expected to do with the final rule on disclosing their prices.
Advocates claim a newly issued regulation could transform how employers pay for employee health care coverage.
On June 13, the U.S. Departments of Health and Human Services, Labor and the Treasury issued a final rule allowing employers of all sizes that do not offer a group coverage plan to fund a new kind of health reimbursement arrangement (HRA), known as an individual coverage HRA (ICHRA). The departments also posted FAQs on the new rule.
Starting Jan. 1, 2020, employees will be able to use employer-funded ICHRAs to buy individual-market insurance, including insurance purchased on the public exchanges formed under the Affordable Care Act (ACA).
Under IRS guidance from the Obama administration (IRS Notice 2013-54), employers were effectively prevented from offering stand-alone HRAs that allow employees to purchase coverage on the individual market.
“Using an individual coverage HRA, employers will be able to provide their workers and their workers’ families with tax-preferred funds to pay all or a portion of the cost of coverage that workers purchase in the individual market,” said Joe Grogan, director of the White House Domestic Policy Council. “The departments estimate that once employers fully adjust to the new rules, roughly 800,000 employers will offer individual coverage HRAs to pay for insurance for more than 11 million employees and their family members, providing them with more options for selecting health insurance coverage that better meets their needs.”
The new rule “is primarily about increasing employer flexibility and worker choice of coverage,” said Brian Blase, special assistant to the president for health care policy. “We expect this rule to particularly benefit small employers and make it easier for them to compete with larger businesses by creating another option for financing worker health insurance coverage.”
The final rule is in response to the Trump administration’s October 2017 executive order on health care choice and competition, which resulted in an earlier final rule on association health plans that is now being challenged in the courts, and a final rule allowing low-cost short-term insurance that provides less coverage than a standard ACA plan.
New Types of HRAs
Existing HRAs are employer-funded accounts that employees can use to pay out-of-pocket health care expenses but may not use to pay insurance premiums. Unlike health savings accounts (HSAs), all HRAs, including the new ICHRA, are exclusively employer-funded, and, when employees leave the organization, their HRA funds go back to the employer. This differs from HSAs, which are employee-owned and portable when employees leave.
The proposed regulations keep the kinds of HRAs currently permitted (such as HRAs integrated with group health plans and retiree-only HRAs) and would recognize two new types of HRAs:
What ICHRAs Can Do
Under the new HRA rule:
The rule also includes a disclosure provision to help ensure that employees understand the type of HRA being offered by their employer and how the ICHRA offer may make them ineligible for a premium tax credit or subsidy when buying an ACA exchange-based plan. To help satisfy the notice requirements, the IRS issued an Individual Coverage HRA Model Notice.
QSEHRAs and ICHRAs
Currently, qualified small-employer HRAs (QSEHRAs), created by Congress in December 2016, allow small businesses with fewer than 50 full-time employees to use pretax dollars to reimburse employees who buy nongroup health coverage. The new rule goes farther and:
The legislation creating QSEHRAs set a maximum annual contribution limit with inflation-based adjustments. In 2019, annual employer contributions to QSEHRAs are capped at $5,150 for a single employee and $10,450 for an employee with a family.
The new rule, however, doesn’t cap contributions for ICHRAs.
As a result, employers with fewer than 50 full-time employees will have two choices—QSEHRAs or ICHRAs—with some regulatory differences between the two. For example:
“QSEHRAs have a special rule that allows employees to qualify for both their employer’s subsidy and the difference between that amount and any premium tax credit for which they’re eligible,” said John Barkett, director of policy affairs at consultancy Willis Towers Watson.
While the ability of employees to couple QSEHRAs with a premium tax credit is appealing, the downside is QSEHRA’s annual contribution limits, Barkett said. “QSEHRA’s are limited in their ability to fully subsidize coverage for older employees and employees with families, because employers could run through those caps fairly quickly,” he noted.
For older employees, the least expensive plan available on the individual market could easily cost $700 a month or $8,400 a year, Barkett pointed out, and “with a QSEHRA, an employer could only put in around $429 per month to stay under the $5,150 annual limit for self-only coverage.”
Similarly, for employees with many dependents, premiums could easily exceed the QSEHRA’s family coverage maximum of $10,450, whereas “all those dollars could be contributed pretax through an ICHRA,” Barkett said.
An Excepted-Benefit HRA
In addition to allowing ICHRAs, the final rule creates a new excepted-benefit HRA that lets employers that offer traditional group health plans provide an additional pretax $1,800 per year (indexed to inflation after 2020) to reimburse employees for certain qualified medical expenses, including premiums for vision, dental, and short-term, limited-duration insurance.
The new excepted-benefit HRAs can be used by employees whether or not they enroll in a traditional group health plan, and can be used to reimburse employees’ COBRA continuation coverage premiums and short-term insurance coverage plan premiums.
Safe Harbor Coming
With ICHRAs, employers still must satisfy the ACA’s affordability and minimum value requirements, just as they must do when offering a group health plan. However, “the IRS has signaled it will come out with a safe harbor that should make it straightforward for employers to determine whether their ICHRA offering would comply with ACA coverage requirements,” Barkett said.
Last year, the IRS issued Notice 2018-88, which outlined proposed safe harbor methods for determining whether individual coverage HRAs meet the ACA’s affordability threshold for employees, and which stated that ICHRAs that meet the affordability standard will be deemed to offer at least minimum value.
The IRS indicated that further rulemaking on these safe harbor methods is on its agenda for later this year.
The Trump administration announced a proposed rule today that would allow businesses to give employees money to purchase health insurance on the individual marketplace, a move senior officials say will expand choices for employees that work at small businesses.
The proposed rule, issued by the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Department of Treasury, would restructure Obama-era regulations that limited the use of employer-funded accounts known as health reimbursement arrangements (HRA). The proposal is part of President Donald Trump’s “Promoting Healthcare Choice and Competition” executive order issued last year, which tasked the agencies with expanding the use of HRAs.
Senior administration officials said the proposed change would bring more competition to the individual marketplace by giving employees the chance to purchase health coverage on their own. The rule includes “carefully constructed guardrails” to prevent employers from keeping healthy employees on their company plans and incentivizing high-cost employees to seek coverage elsewhere.
That issue was a primary concern under the Obama administration, which barred the use of HRAs for premium assistance. The 21st Century Cures Act established Qualified Small Employer Health Reimbursement Accounts (QSEHRA), but those are subject to stringent limitations.
Under the new rule, HRA money would remain exempt from federal and payroll income taxes for employers and employees. Additionally, employers with traditional coverage would be permitted to reserve $1,800 for supplemental benefits like vision, dental and short-term health plans.
Officials estimate 10 million people would purchase insurance through HRAs, including 1 million people that were not previously insured. Most of those people would be concentrated in small and mid-sized businesses.
The proposed change would “unleash consumerism” and “spur innovation among providers and insurers that directly compete for consumer dollars,” one senior official said. Officials expect 7 million people will be added to the individual marketplace over the next 10 years.
The rule does not change the Affordable Care Act’s employer mandate, which requires employers with 50 or more employees to offer coverage to 95% of full-time employees. Administration officials expect the proposal will have the biggest impact on small businesses with less than 50 employees.
However, the rule could scale back the use of premium subsidies. If the HRA is considered “affordable” based on the amount provided by the employer, the employee would not be eligible for a premium tax credit. If the HRA fails to meet those minimum requirements, the employee could choose between a premium tax credit and the HRA.
Overall, the rule will “create a greater degree of value in healthcare and the health benefits marketplace than we would otherwise see,” one official said.
The regulation, if finalized, is proposed to be effective for plan years beginning on and after January 1, 2020.
The next ACA compliance hurdle employers are set to face is managing subsidy notifications and appeals. Many exchanges recently began mailing out notifications this summer and it’s important for employers to make sure they’re prepared to manage the process. Why? Well, subsidies—also referred to as Advanced Premium Tax Credits, are a trigger for employer penalties. If you fail to offer coverage to an eligible employee and the employee receives a subsidy, you may be liable for a fine.
If an employee receives a subsidy, you’ll receive a notice. This is where things can get complicated. You need to ensure that the notifications go directly to the correct person or department as soon as possible, because you (the employer) only have 90 days from the date on the notification to respond. And rounding up these notices may not be so easy. For example, your employee may not have put the right employer address on their exchange / marketplace application. Most often, employees will list the address of the location where they work, not necessarily the address where the notification should go, like your headquarters or HR department. If the employee is receiving a subsidy but put a wrong address or did not put any address for their employer, you will not even receive a notice about that employee.
Once you receive the notification, you must decide whether or not you want to appeal the subsidy. If you offered minimum essential coverage (MEC) to the employee who received a subsidy and it met both the affordability and minimum value requirements, you should consider appealing.
You may think that appealing a subsidy and potentially getting in the way of your employee receiving a tax credit could create complications. Believe it or not, you may actually be doing your employee a favor. If an employee receives a subsidy when they weren’t supposed to, they’ll likely have to repay some (or all) of the subsidy amount back when they file their taxes. Your appeal can help minimize the chance of this happening since they will learn sooner rather than later that they didn’t qualify for the subsidy. Plus, the appeal can help prevent unnecessary fines impacting your organization by showing that qualifying coverage was in fact offered.
If you have grounds to appeal, you can complete an Employer Appeal Request Form and submit it to the appropriate exchange / marketplace (Note: this particular form is intended to appeal subsidies through the Federal exchange). The form will ask for information about your organization, the employee whose subsidy you’re appealing, and why you’re appealing it. Once sent, the exchange will notify both you and the employee when the appeal was received.
Next, the exchange will review the case and make a decision. In some cases, the exchange may choose to hold a hearing. Once a decision is made, you and your employee will be notified. But it doesn’t necessarily end there. Your employee will have an opportunity to appeal the exchange’s decision with the Department of Health and Human Services (HHS). If HHS decides to hold a hearing, you may be called to testify. In this situation, HHS will review the case and make a final decision. If HHS decides that the employee isn’t eligible for the subsidy, then the employee may have to repay the subsidy amount for the last few months. On the other hand, if the HHS decides the employee is eligible for the subsidy, it will be important for you to keep your appeal on file since this can potentially result in a fine from the IRS later in the year.
Sound complicated? It certainly can be. Managing subsidies and appeals could quickly add up to a substantial time investment, and if handled improperly you could see additional impacts to your bottom line in the form of fines. Handling subsidy notifications and appeals properly up front can lead to fewer fines down the road, benefiting both you and your employees.
On March 1, 2016, the Department of Health and Human Services (HHS) announced the finalized 2017 health plan out-of-pocket (OOP) maximums. Applicable to non-grandfathered health plans, the OOP limits for plan years beginning on or after January 1, 2017 are $7,150 for single coverage and $14,300 for family coverage, up from $6,850 single/$13,700 family in 2016. The OOP maximum includes the annual deductible and any in-network cost-sharing obligations members have after the deductible is met. Premiums, pre-authorization penalties, and OOP expenses associated with out-of-network benefits are not required to be included in the OOP maximums.
In addition to the new OOP maximum limits, employers offering high deductible health plans need to be particularly mindful of the embedded OOP maximum requirement. Beginning in 2016, all non-grandfathered health plans, whether self-funded or fully insured, must apply an embedded OOP maximum to each individual enrolled in family coverage if the plan’s family OOP maximum exceeds the ACA’s OOP limit for self-only coverage ($7,150 for 2017). The ACA-required embedded OOP maximum is a new and often confusing concept for employers offering a high deductible health plan (HDHP). Prior to ACA, HDHPs commonly imposed one overall family OOP limit on family coverage (called an aggregate OOP) without an underlying individual OOP maximum for each covered family member. Now, HDHPs must comply with the IRS deductible and OOP parameters for self-only and family coverage in addition to ACA’s OOP embedded single limit requirement.
The IRS is expected to announce the 2017 HDHP deductible and OOP limits in May 2016.
Plans and insurers must cover all 18 contraception methods approved by the U.S. Food and Drug Administration, according to a new set of questions and answers on the Affordable Care Act’s preventive care coverage requirements.
“Reasonable medical management” still may be used to steer members to specific products within those methods of contraception. A plan or insurer may impose cost-sharing on non-preferred items within a given method, as long as at least one form of contraception in each method is covered without cost-sharing.
However, an individual’s physician must be allowed to override the plan’s drug management techniques if the physician finds it medically necessary to cover without cost-sharing an item that a given plan or insurer has classified as non-preferred, according to one of the frequently asked questions from the U.S. Departments of Labor, Health and Human Services and the Treasury.
The ACA mandated all plans and insurers to cover preventive care items, as defined by the Public Health Service Act, without cost-sharing. Eighteen forms of female contraception are included under the preventive care list. The individual FAQs on contraception clarified the following requirements.
The FAQ comes just weeks after reports and news coverage detailed health plan violations of the women coverage provisions of the ACA.
Testing and Dependent Care Answers
In questions separate from contraception, plans and insurers were told they must cover breast cancer susceptibility (BRCA-1 or BRCA-2) testing without cost-sharing. The test identifies whether the woman has genetic mutations that make her more susceptible to BRCA-related breast cancer.
Another question stated that if colonoscopies are performed as preventive screening without cost-sharing, then plans could not impose cost-sharing on the anesthesia component of that service.
On December 22, 2014, the Departments of Health and Human Services (HHS) issued proposed regulations for changes to the Summary of Benefits and Coverage (SBC).
The proposed regulations clarify when and how a plan administrator or insurer must provide an SBC, shortens the SBC template, adds a third cost example, and revises the uniform glossary. The proposed regulations provide new information and also incorporate several FAQs that have been issued since the final SBC regulations were issued in 2012.
These proposed changes are effective for plan years and open enrollment period beginning on or after September 1, 2015. Comments on the proposed regulations will be accepted until March 2,2015 and are encourages on many of the provisions.
The new SBC template eliminates a significant amount of information that the Departments characterized as not being required by law and/or as having been identified by consumer testing as less useful for choosing coverage.
The sample completed SBC template for a standard group health plan has been reduced from four double-sided pages to two-and-a-half double-sided pages. Some of the other changes include:
Revisions to the uniform glossary have also been proposed. The glossary must be available to plan participants upon request. Some definitions have been changed and new medical terms such as claim, screening, referral and specialty drug have been added. Additional terms related to health care reform such as individual responsibility requirement, minimum value and cost-sharing reductions have also been added.
Paper vs Electronic Distribution
SBCs may continue to be provided electronically to group plan participants in connection with their online enrollment or online renewal of coverage. SBCs may also be provided electronically to participants who request an SBC online. These individuals must also have the option to receive a paper copy upon request.
SBCs for self-insured non-federal government plans may continue to be provided electronically if the plan conforms to either the electronic distribution requirements that apply ERISA plan or the rules that apply to individual health insurance coverage.
Types of Plans to Which SBCs Apply
The regulations confirm that SBCs are not required for expatriate health plans, Medicare Advantage plans or plans that qualify as excepted benefits. Excepted benefits include:
SBCs are required for:
The rush for group health plan administrators to navigate the Centers for Medicare & Medicaid Services (CMS) website and obtain a Health Plan Identifier (HPID) ahead of the November 5th deadline is over. On October 31, 2014, the CMS Office of e-Health Standards and Services (OESS), the division of the Department of Health & Human Services (HHS) that is responsible for enforcement of the HIPAA standard transaction requirements, announced a “delay, until further notice,” of the HPID requirements. The regulatory obligations of plan administrators delayed by this notice are the: (i) obtaining of a HPID, and (ii) the use of the HPID in HIPAA transactions.
This delay comes on the heels of a recommendation by the National Committee on Vital and Health Statistics (NCVHS), an advisory body to HHS. The NCVHS asked HHS to review the HPID requirement and recommended that HPIDs not be used in HIPAA transactions. NCVHS’s primary opposing argument to implementation of the HPID standard was that the healthcare industry has already adopted a “standardized national payer identifier based on the National Association of Insurance Commissioners (NAIC) identifier.”
Whether HHS will adopt the recommendations of the NCVHS on a permanent basis remains to be seen, but for the time being, plan administrators may discontinue the HPID application process and should stay tuned for further announcements from HHS.
The Department of Health and Human Services (HHS) recently updated the Code Set Rules. The Code Set rules are part of the Health Insurance Portability and Accountability Act’s (HIPPA’s) Administrative Simplification Provisions. These rules create uniform electronic standards for common health plan administrative processes. Requiring health care providers and other stakeholders to use the same data formats for common transactions simplifies certain administrative aspects of providing and paying for health care.
Under the latest rules, self funded employers will need to apply for a Health Plan Identifier (HPID). Most employers will have to apply by November 5, 2014. This number will be used to ensure employers comply with certain Code Set rules requirements.
The Code Set Rules have affected covered entities for a number of years. However, certain aspects of these rules were not enforced in the past. In order to promote efficient health coverage, health care reform includes provisions to ensure health care stakeholders are complying with specific transaction and code set requirements.
Review of the HIPAA Code Set Rules
The final HIPAA Transaction and Code regulations published in August 2000 applied to most health plans as of October 16, 2003. They require covered entities conducting certain transactions electronically to use specific standards and code sets. Covered entities include:
Most of the applicable transactions occur between the health plan and health care providers covering areas like claims submission and payment, eligibility, and authorizations/referrals, however the enrollment and disenrollment transaction process generally involves the employer and the health plan.
New Requirements for a HPID for Self Funded Plans
The Code Set rules require all parties involved in the health care system to use an identifying number. Large group health plans (plans with an annual cost of $5 million or more) need to register for their Health Plan Identifier (HPID) number by November 5, 2014. Small group health plans (plans with an annual cost of less than $5 million) will have an extra year to obtain an HPID. Annual cost is based on paid claims before stop loss recoveries and excluding administrative costs and stop loss premiums.
Insurance carriers will likely apply for the 10-digit HPID number for all of their fully- insured group health plans. Employers will have to apply for their 10-digit HPID for self-funded medical plans. The health plan needs to use the HPID number for any of the standard transactions the Code Set rules cover.
Every health plan considered a covered entity must obtain an HPID. The regulations include delineations of group health plans including Controlling Health Plans (a health plan that controls its own business activities, actions and policies) and Subhealth Plan (a health plan whose business activities, actions or policies are directed by a Controlling Health Plan).
Employers are not really sure how the relationship between controlling health plans and subhealth plans would apply to employer-sponsored health plans and are awaiting further clarification from HHS on this issue.
All health plans, regardless of size, must use their HPIDs in standard transactions by November 7, 2016. A “standard transaction” is a CMS menu of transactions, like a claim payment, that must be coded with an HPID.
Employer must provide information about their organizations and health plans when they register for the HPID electronically. More information on applying for an HPID is available here.
Certification Requirements for Compliance with Standard Transaction Rules
Health plans must also verify with HHS that they comply with the Code Set rules. Health plans have been subject to these rules for almost a decade, however there has been little to no oversight on compliance with the common formats. HHS is now requiring a certification showing that the plan is using the standard formats. Initially, the certification will only be done on a few of the required transactions.
The health plan must first certify that they meet the Code Set requirements for eligibility, claim status and EFT and remittance advice transactions. Plans have two different options to certify they are complying. Both involve having specific vendors certify the plan uses the proper transaction formats. The two options are as follows:
The HIPAA Credential option involves testing the required transactions with at least three trading partners. Those three partners have to represent at least 30% of transactions conducted with providers. If it does not constitute 30%, then the plan must confirm it has successfully traded with at least 25%.
The Phase III Core Seal will require the Controlling Health Plan to test transactions with an authorized testing vendor.
All certifications will be filed with HHS. The first one will be due by December 31, 2015. Health insurance carriers and Third Party Administrators will most likely provide the certifications for employer-sponsored health plans, but employers will still need more details on the filing.
The second certification applies to other transactions the Code Set rules cover. Specifically, the second certification applies to claims information, enrollment, premium payments, claims attachments, and authorizations or referrals. HHS has not issued any guidance on these certifications yet. These second certifications are also due by December 31, 2015. However, because of the lack of specific guidance, it is very likely this due date may be delayed.
To register for an HPID, employers need to take the following steps:
1. Determine when the plan must obtain an HPID
2. If your plan if fully insured, contact your insurance carrier. It appears most insurance carriers will apply for the HPID for fully insured plans.
3. If your plan is self-funded, schedule time over the next several months to register for an HPID for your health plan. The registration is a CMS-managed online application process. The regulations estimate that it will take 20 -30 minutes to complete the application. Sponsors will be directed to an online enumeration system titled: Health Plan and Other Entity Enumeration System (HPOES).
Following the recent Supreme Court ruling regarding contraceptives in the Hobby Lobby Stores case, a new circuit decision now sets the stage for another possible Supreme Court decision on the ACA. On Tuesday (July 22, 2014), the U.S. Court of Appeals for the District of Columbia (in Halbig v. Burwell) and the U.S. Court of Appeals for the Fourth Circuit (in King v. Burwell) issued conflicting opinions regarding the IRS’ authority to administer subsidies in federally facilitated exchanges.
In general, the employer mandate requires that “applicable large employers” offer their full-time employees minimum essential coverage or potentially pay a tax penalty in 2015. However, according to the statutory text of the ACA, the penalties under the employer mandate are triggered only if an employee receives a subsidy to purchase coverage “through an Exchange established by the State under section 1311…” of the ACA. If a state elected not to establish an exchange or was unable to establish an operational exchange by January 1, 2014, the Secretary of HHS was required to establish a federal-run exchange under section 1321 of the ACA.
The appellants in each of these cases are residents of states that did not establish state run exchanges. Consequently, the appellants argue that the IRS does not have the authority to administer subsidies in their states because the exchanges were set up by HHS under section 1321 of the ACA and not under section 1311 as is the clear prerequisite for IRS authority to administer the subsidies.
In regulations implementing the subsidies, the IRS recognized this discrepancy and noted that “[c]ommentators disagreed on whether the language [of the ACA] limits the availability of the premium tax credit only to taxpayers who enroll in qualified health plans [QHPs] on State Exchanges."
The IRS, however, rejected these comments and stated that, “[t]he statutory language of section 36B and other provisions of the Affordable Care Act support the interpretation that credits are available to taxpayers who obtain coverage through a State Exchange, regional Exchange, subsidiary Exchange, and the Federally-facilitated Exchange. Moreover, the relevant legislative history does not demonstrate that Congress intended to limit the premium tax credit to State Exchanges. Accordingly, the final regulations maintain the rule in the proposed regulations because it is consistent with the language, purpose, and structure of section 36B and the Affordable Care Act as a whole.”
In Halbig v. Burwell, the D.C. Circuit disagreed with the IRS’ interpretation and, in a 2-1 decision, held that the IRS regulation authorizing tax credits in federal exchanges was invalid. The court focused heavily on the text itself and concluded, “that the ACA unambiguously restricts the …subsidy to insurance purchased on Exchanges established by the state.”
In an opinion issued only hours following the D.C. Circuit decision, the 4th Circuit, in King v. Burwell, agreed with the IRS’ interpretation and upheld the subsidies by permitting the IRS to decide whether the premium tax credits should be available over the federal exchange. The justices argued that the text did not intend to create two unequal exchanges. Additionally, they argue that the ambiguous text of the act intended that the exchanges be operated as appendages of the Bureaucracy, and so under the directives of the IRS.
Currently, 36 states are using federally facilitated exchanges, including Florida. Further, roughly 85% of enrollees who signed up for health insurance receive subsidies allowing them to purchase coverage that would be otherwise unaffordable. If the subsidies allocated over the federal exchange were declared invalid, those individuals’ ability to receive subsidies to purchase coverage could be jeopardized. As a result, the average price of a health plan is projected to rise from $82 per month to $346 per month, making it more difficult to afford for approximately 5.4 M enrollees.
While the Halbig decision is a major setback to the ACA, it is almost certainly not the final word on this issue. Given the fact that two courts have reached different outcomes, the Supreme Court is more likely to weigh in on the decision. However, the Halbig decision is likely to be reviewed by the entire D.C. Circuit prior to any potential review by the Supreme Court.