By Sarah Sipek
Jun. 25, 2015
UPDATED: June 25, 2015, 12:08 p.m. CT
The U.S. Supreme Court has ruled in favor of keeping a key provision from the Affordable Care Act.
Thanks to a 6-3 decision in the King v. Burwell case, millions of Americans will retain their right to receive federal tax subsidies under the ACA.
The justices sided with the Obama administration, saying that the health care reform law allows Americans in all states — not just those in states that have established their own exchanges — to receive federal subsidies.
"Five years ago, after nearly a century of talk, decades of trying, a year of bipartisan debate, we finally declared that in America, health care is not a privilege for a few but a right for all," President Barack Obama said in a statement from the White House. "The Affordable Care Act is here to stay."
Chief Justice John Roberts wrote the court’s majority opinion.
During the March hearings on King v. Burwell, Roberts said he saw “a serious constitutional problem” in the idea that Congress would force states to set up exchanges or risk their residents losing tax credits.
Many feared that if the Supreme Court ruled against the legality of federal subsidies, millions of Americans would be left uninsured and that the U.S. health care system could effectively fall apart.
The ACA laid out a plan in which states had the ability to set up their own health insurance exchanges, but the federal government could step in and set up the exchanges for the states if they could not do it on their own. King v. Burwell questioned whether the U.S. government can subsidize insurance in the 34 states that have not yet set up their own insurance markets.
While Americans can now celebrate their continued access to affordable health care, not much changes for employers, according to Gary Kushner, a Workforce columnist who is the president and CEO of Kushner & Co., a benefits consulting firm.
“Employers and individuals alike will be able to continue their planning for ACA compliance now knowing all exchanges will be treated the same,” Kushner said. “It also means that the employer responsibility provisions of the ACA will be unaffected. Any employer holding back on their planning in anticipation that the court would overturn some or all of the ACA should get started immediately.”
If the decision had gone the other way, the employer mandates and shared responsibility payments would have been removed in states that have federal exchanges, added Rachel Cutler Shim, counsel in the Tax, Benefits & Wealth Planning Group at law firm Reed Smith.
"That would have put into question all of the reporting requirements and whether they were still required and all of the work that employers have been doing to implement look-back period and the measurement method and to track hours so that they can determine which employees are full time would have all been for naught if you weren’t operating in a state that had a state-run exchange," Shim said. "Under the current decision where they essentially said federal exchange and marketplaces can give subsidies, then the shared responsibility payment remains intact, the individual mandate remains intact, and employers can move forward and implement the requirements of the act that they have been working on."
Though their responsibilities have not changed, employers must still be content with the numerous challenges of getting in compliance with ACA mandates, a task the Society for Human Resource Management has pledged to assist: “Today the Supreme Court reaffirmed the constitutionality of a key element of the Affordable Care Act," SHRM said in a written statement. "While this provision of the statute remains intact, other challenges in the ACA remain for employers. SHRM pledges to work with policymakers to address these challenges, including the definition of a full-time employee for coverage mandate, the pending excise tax on high-value health care plans and employer flexibility in offering wellness programs.”
Jane Perkins, the legal director of the National Health Law Program, added in a written statement: "More than 8 million Americans can now breathe a sigh of relief knowing that the law — not ideology — carried the day."
Check back throughout the day with continuing coverage of the King v. Burwell ruling.
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