The Supreme Court has once again upheld tax subsidies for everyone, continuing a decision they first made a couple of years ago. The decision was 6-3 as the court ruled that subsidies should be available for all people, not just those who purchase health insurance through state exchanges, but also those who purchase insurance through federal exchanges.
Premium Tax Credit
For a taxpayer to be eligible for a subsidy, he or she must meet the following criteria:
- The household income must be within 100 percent and 400 percent of the federal poverty line.
- The person must have purchased their insurance through an exchange established by the state.
- The person cannot be claimed as a dependent by someone else.
- The person must not have been eligible for employer-provided insurance or from another entity such as Medicare, TRICARE, Medicaid or CHIP.
- Except for limited circumstances, the person cannot file a tax return under the status of Married Filing Separately.
The Supreme Court issued its decision, by a 6-3 vote, without seeking help from the IRS because of the ambiguity of the statute. In making its ruling, the Supreme Court made sure to note that this issue was not for the IRS.
In the decision, the Supreme Court said that there are three reforms of the Affordable Care Act that interlock. They include:
- Insurers are barred from taking the health of a person into account when determining whether or not insurance will be issued and at what price.
- Individuals are required to maintain a minimum amount of coverage or face a penalty.
- Subsidies must be provided to those who are eligible.
In issuing the ruling, the Supreme Court said that the language in the legislation is ambiguous and could be interpreted to mean Federal Exchanges, not just State Exchanges. The decision from the Supreme Court, the second in a span of three years, ultimately saved the Affordable Care Act from being repealed.
Healthcare tax issues are difficult to wade through. The experienced staff at Tobin & Collins can answer all of your ACA questions and guide you through the requirements. Contact the friendly staff today to discuss the ACA and how it affects you.