The Supreme Court Ruling on ACA Subsidies: What does this mean?

With the ACA subsidy access remaining available in all states, does this affect you or your business? 

On June 25^th The United States Supreme Court issued their ruling on the King vs. Burwell case, upholding the government subsidies as provided in the Affordable Care Act (ACA).  This case was based on wording in the ACA that could be interpreted two ways. 
As it was written, the wording read that government subsidies would only be available to those in states that had set up their own exchanges.  However, when the wording is interpreted as part of the ACA, as a whole, it became clear to the court that this limitation was not the intent of the law. 

Related read: Affordable Care Act – Key Changes for 2014 & 2015 Tax Years

As the intent of the ACA was to make healthcare affordable to all, then why would they only provide subsidies to people living in states that established their own exchanges?  As a result of this decision, subsidy access will remain available to all eligible individuals.

This ruling was important because of what could have happened had it not been upheld.  If the Supreme Court ruled that wording should be interpreted as it is written, subsidies would only be available states that have their own exchanges.  This would mean that many individuals currently using the marketplace would be hit with higher premiums, and most may not be able to afford that.  In addition, had this not been ruled in favor of the ACA, it could have opened the door for more cases involving the ACA and could have ultimately led to its unraveling.

Since the ruling was upheld, not only do the subsidies remain available to all eligible individuals, but there could be a decline in the number of state-run exchanges.  The costs incurred by states that developed and now operate them were high and the cost to continue operating them may be seen as unnecessary.  Now that the threat to the very existence of the ACA due to the reliance on the federal exchange is gone, there is one less need to having a state-run exchange.  Therefore, as a result of this ruling, we could see the number of state-run exchanges start to drop. 

Understanding the ACA, subsidies and changes as a result of federal rulings can be confusing.  I’m ready to help you stay financially focused and ensure your business stays compliant while receiving the tax benefits in which your business qualifies. Contact us at 216-831-0733 or info@zinnerco.com.

Together with the rest of the Zinner team of financial and business advisors, we can help position your business for the most meaningful tax benefit and sensible financial plan for a worry-free future.