Nov. 10, 2014 – Last week, the U.S. Supreme Court granted review of a case to determine whether tax rules, enacted as part of the Patient Protection and Affordable Care Act, authorize tax credits for insurance plans purchased outside state-run “exchanges.”

Four individuals have seized on the specific language of the Internal Revenue Code that says federal tax credit subsidies are available for coverage that is purchased through an exchange “established by the state” under the Affordable Care Act.

“Exchanges” are online insurance marketplaces where people can go to buy health insurance. The subsidies help lower income individuals afford the health insurance premiums.

Twenty-six states, including Wisconsin, declined to establish state-run health insurance exchanges for the purchase of health insurance. Individuals in such states can purchase insurance through the federal health insurance exchange at healthcare.gov.

The petitioners argue that if a state did not establish an exchange, the tax code does not allow a tax credit subsidy, based on the language of the code (26 U.S.C §36B).

The U.S. Court of Appeals for the District of Columbia Circuit ruled that under 26 U.S.C.  36B, subsidies are not available for purchases made through the federal exchange.

However, the U.S. Court of Appeals for the Fourth Circuit ruled that subsidies are available to those who qualify, regardless of whether the insurance is purchased through an exchange established by the state or through the federal exchange.

The challengers’ principal argument is that the Affordable Care Act encourages states to establish their own exchanges by offering the subsidies for insurance purchased through them, and establishes penalties for states that don’t establish them.

Now the U.S. Supreme Court will decide.

“Whatever the right answer to the legal issue is, no one can doubt its significance to millions of Americans,” wrote Tom Goldstein for SCOTUSBlog back in July. “And while the [Obama] administration publicly argues that the challenge is meritless and politically motivated, the language of the state actually makes the legal claim very serious.”

Open enrollment starts this week

Legal challenges aside, the open enrollment period to purchase health insurance plans starts this week. The State Bar of Wisconsin has published articles designed to help State Bar members better understand and evaluate their health insurance coverage options, noting that the State Bar’s Group Plan is ending.

Navigating Health Insurance Options: State Bar Group Health Insurance Program Ends Jan. 1 – Open Enrollment Begins Nov. 15 – WisBar InsideTrack (Oct. 1, 2014)

Re-examine Your Health Insurance Options During Open Enrollment – WisBar InsideTrack (Oct. 1, 2014)