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Lawsuit Challenges Exchange Distinctions

February 21, 2014 | No Comments
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There is a lawsuit pending, in the District of Columbia, challenging the ability of the federal government to provide a subsidy under the Affordable Care Act in those cases in which the individual is enrolling pursuant to a federal exchange.  This lawsuit is based upon the fact that the language of the statute provides that subsidies can be paid to exchanges or health markets that were “established by the state”.  Therefore, in cases where the exchanges were not established by the state, but are federal exchanges (as is the case in New Jersey), the plaintiffs have asserted that subsidies cannot be paid.  In situations in which subsidies are not paid for individuals enrolling for insurance on the exchanges, employers cannot be penalized for failing to offer their employees insurance coverage.  While unstated, one can assume that that is the reason for these suits being brought by businesses against the Affordable Care Act.

The concern for providers is that patients who are covered by “subsidized” insurance, but lose the subsidy, may no longer opt to pay the full cost of such insurance, making it more difficult for providers to be reimbursed for the cost of their care if coverage is lost.

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