A Tale of Two Circuits: D.C. Circuit, Fourth Circuit Split on ACA Subsidies

It was the best of times for ACA subsidies, it was the worst of times for ACA subsidies. On Tuesday, the Court of Appeals for the D.C. Circuit (“D.C. Circuit”) and the Court of Appeals for the Fourth Circuit (“Fourth Circuit”) came to different conclusions as to the legality of Affordable Care Act (“ACA”) subsidies in Halbig v. Burwell and King v. Burwell, respectively. In both cases, the challengers argued that Section 36B of the ACA, which creates subsidies for purchasing health insurance, only applies to health insurance plans purchased through a state-established health insurance exchange, and not a federally-created health insurance exchange. The Internal Revenue Service (“IRS”) has interpreted Section 36B to allow those purchasing health insurance through both federal and state exchanges to qualify for subsidies in the form of tax credits.

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