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Courts Issue Conflicting Opinions on ACA Premium Tax Credits

Two U.S. appellate courts released conflicting opinions July 22 on whether low-income Americans who purchase insurance coverage through federally facilitated marketplaces have access to tax credits to help offset the cost of monthly premiums. According to a brief by the U.S. Department of Health and Human Services, roughly 87 percent of individuals who have purchased health insurance through federally facilitated marketplaces received these credits.

The first opinion was released by the U.S. Court of Appeals for the District of Columbia Circuit. With a 2-1 decision in Halbig v. Burwell, the court ruled that premium tax credits are not available to individuals who purchase insurance coverage through federally facilitated marketplaces. The court did not go so far as to order the IRS to stop giving tax credits. Within hours following the release of this opinion, the U.S. Department of Justice announced that it plans to appeal and ask for review by the full Court of Appeals for the DC Circuit.

Later in the day, the U.S. Court of Appeals for the 4th Circuit released its opinion on a separate case, King v. Burwell. In a unanimous 3-0 decision, the court held that premium tax credits are available to individuals who purchase insurance coverage through federally facilitated marketplaces.

Exchange subsidies are a major component of the ACA’s strategy to improve health insurance affordability and access to care. The ACA established tax credits for individuals with income between 100 percent and 400 percent of the federal poverty level to help defray the cost of coverage.

Contact Xiaoyi Huang, JD, director of policy, at xhuang@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Matt Buechner is the policy and advocacy associate for America's Essential Hospitals.

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