We now have a decision from another Court of Appeals (this time it’s the Fourth Circuit) on the exact same subsidy issue as posted earlier today. This court has held that it is legal for individuals enrolled in federally-run exchanges to receive subsidies. If this decision ultimately prevails, employers would owe penalties on employees who receive subsidies regardless what kind of exchange their state has.
This court’s decision also may be appealed, either to the full Court of Appeals for he Fourth Circuit or to the Supreme Court. Again, the decision won’t be enforced while the appeal is in process. This conflict between the Court of Appeals’ decisions increases the chances the Supreme Court will hear the case sooner rather than later.
The basic issue in these cases is whether to simply read one sentence in PPACA, which says that a taxpayer “enrolled through an Exchange established by a State” is entitled to a premium subsidy to mean that only a person enrolled in a state-run exchange is eligible for a subsidy, or if the IRS had the authority to look at PPACA as a whole and conclude that it would not make sense to limit subsidies to people in state-run exchanges, and therefore interpret the law to mean a person enrolled in any exchange is subsidy-eligible.
