On January 15, 2014, a federal judge rejected a challenge to the health insurance tax credits offered in the federally-run health insurance exchanges.
The suit, Halbig v. Sebelius, was brought by individuals and businesses from Texas, Kansas, Missouri, Tennessee, West Virginia and Virginia. They asserted that the wording of the Affordable Care Act allowed tax credits in state-run exchanges, but not the federally-run exchange.
More than two-thirds of the states use the federally-run exchange, healthcare.gov.
The health insurance tax credits are a key part of the healthcare overhaul. They are available to people with annual incomes of up to 400% of the federal poverty level, equivalent to $94,200 for a family of four in 2013.
On the other hand, without the tax credits more individuals would qualify for a hardship exemption from the Affordable Care Act's requirement to buy insurance or pay a tax. Without the health insurance tax credits in 36 states, the individual mandate would be weakened.
U.S. District Judge Paul Friedman ruled that the Affordable Care Act intended for the tax credits to be available nationwide, regardless of whether people were buying coverage through a state-run exchange or the federally-run exchange.
"The plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally facilitated exchanges," Friedman wrote in the ruling.
The challengers filed a notice in court Wednesday that they plan to appeal.
See related news coverage on this ruling:
- Judge Rejects Challenge to Health-Care Law Subsidies (Wall Street Journal)
- Court Rules That Tax Credits Are Available Through Federal Exchange (Health Affairs Blog)
- Obamacare Tax Subsidy Challenge Dismissed by U.S. Judge (Bloomberg News)
- Judge dismisses lawsuit challenging Obamacare's tax credits (The Business Journals)