The Supreme Court of the United States will soon consider whether the Internal Revenue Service (IRS) may permissibly promulgate regulations to extend tax-credit subsidies to health insurance coverage purchased by individuals through exchanges established by the federal government under section 1321 of the Patient Protection and Affordable Care Act (ACA).
The Issue Before the Fourth Circuit
In King v. Burell, 759 F.3d 358 (4th Cir. 2014), a group of Virginians determined they did not wish to purchase health insurance and wanted to be exempt from the individual mandate, which generally requires all Americans to purchase health insurance. Virginia’s exchange was established by the federal government, not by the Commonwealth of Virginia. The plaintiffs challenged an IRS regulation that granted premium tax credits to individuals who purchased health insurance either on a state-run or federally facilitated insurance “exchange.” These tax credits enabled these individuals to afford health insurance under the law and prevented their exemption from the individual mandate. The Fourth Circuit addressed whether the ACA’s plain language, statutory conflicts or legislative history supported the IRS’s approach and found that the premium tax credit provision of the ACA permitted the IRS’s interpretation.
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