Ask The Advisor: February 2015

Ask The Advisor: February 2015

What Happens If The Supreme Court Rules Against Obamacare?

Q: What would happen if the Supreme Court rules against Obamacare now that people already have purchased coverage? Will I have to repay my premium assistance subsidies? I qualified for $3,456 in premium subsidies last year alone. Will plans be allowed to deny coverage based on pre-existing conditions again?


A: The Supreme Court has agreed to hear another Obamacare challenge in February or March. The outcome could have enormous financial impact on millions of people who purchased their health insurance through, the online federal health insurance exchange.

In the first year of the new healthcare law, a large percentage of enrollees through the federal exchange tended to be older adults, many having pre-existing conditions. In addition, there were individuals who enrolled when they received notice that their former health plan was ending, and still other uninsured consumers did so attempting to comply with the new law to have health coverage or pay a fine.

If the Supreme Court rules against the federal government, that could have a devastating impact on the new program. The case centers on whether people who enrolled through the federal exchange can legally receive subsidies to lower their monthly premiums.

The 2010 health law, which was vague on many other details, specifically states that enrollees can receive subsidies when purchasing health insurance on an exchange "established by the state." Some 34 states, however, don’t operate their own insurance exchanges, and uninsured people living in those states must go through the federal online exchange,, in order to receive subsidized coverage.

The Internal Revenue Service interpreted the law to allow eligible consumers to receive premium subsidies regardless of whether the exchange was run by their state or by the federal government. Challengers of the law question that interpretation, saying that the law as written clearly directs subsidies to state-run exchanges only. Health law proponents say that lawmakers fully intended that subsidies be offered on all exchanges, regardless of whether they were administered by the states or federal government.

Should the Supreme Court strike down subsidies through the federal exchange, it remains unclear what Congress would do and how consumers would be impacted. Obamacare advocates say that consumers will not be required to pay back subsidies if the Court’s ruling is unfavorable. However, TSCL advises caution since the Court has made no decision yet and the IRS has yet to issue guidance.

In the meantime, to comply with the new health law, people need to continue to maintain health insurance or pay a fine, because the individual mandate is still in place. And unless Congress acts to repeal Obamacare in its entirety, insurers will still be required to provide coverage despite pre-existing conditions. The big question remains, however, how millions of people will be able to afford Obabmacare coverage if no subsidies are available.