The Court and Health Insurance (Round 2)

Now that summer is here, especially time marches on from June and July, most schools, colleges and universities conclude their academic year, as well as the United States Supreme Court hand down its ruling and opinions on the major cases that it reviewed during the year, and of them that every Court observer was anticipating was the “second round” on Obamacare health insurance.

What was at issue is the subsidy an individual gets when he/she applies for health insurance through a government’s health insurance marketplace.  What the Obamacare statutory scheme intended is that each state was supposed to setup its own health insurance exchange market place, and thusly an individual would get a subsidy, based on his/her estimated income level for the given year, to wit when an individual files his/her income tax return (after the close of the year, of course), where his/her actual income is then declared, the tax return would determine if an individual received too little of this health insurance subsidy (hence get an extra subsidy, as a refundable tax credit), too much of this health insurance subsidy (hence would have to pay back the excess), or if the subsidy received (as quoted it Little Red Riding Hood) “was just right”.

Now if a state did not establish a health insurance exchange marketplace for individuals (and small businesses) to purchase health insurance policies (to wit 27 states did not), there was always the federal government’s own a health insurance exchange marketplace that an individual (and a small business) would able to purchase a health insurance policy, as well as get the same type of subsidy, as if he/she purchased it through a state health insurance exchange marketplace.  However, that was the problem, because the federal government (through an IRS Treasury Regulation – the IRS is the administrator of Obamacare, including the individual mandate) allowed the subsidy through the federal exchange, even though the Obamacare statute specifically (several times, according to US Supreme Court Justice Antonin Scalia), said the subsidy is only available through a state exchange, and not through the federal exchange.  That is a huge conundrum, because if the subsidy is denied to those individuals who only had to purchase through the federal exchange, it would cause approximately 55% of the US population not to have a subsidy, cause the health insurance premiums to be unaffordable, and thusly become a death knell to Obomacare.

So the question the Supreme Court addressed was that did Congress intended, when it enacted Obamacare, to include the federal health insurance exchange, even though the enacted statute only specifically that the subsidy is only available through a state health insurance exchange?  Well, the Court ruled in the lead opinion of US Supreme Court Chief Justice John Roberts (concurring with Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan) that looking at the statutory framework as a whole that it was truly intended by Congress that the subsidy would be available through the federal health insurance exchange, in order to fill in the gap if a state did not set up its own health insurance exchange (as 27 states did not).  Thusly, Obamacare is definitely is here to stay.

If you need assistance on how much of a subsidy you expect to receive, and/or need to assistance to properly projection your total income for 2015, so that you get just the right amount of subsidy for health insurance, please contact us at and we more than happy to help you with your projected subsidy calculations.