Did Your Aging Parent Purchase an On-Exchange Health Plan?

Did Your Aging Parent Purchase an On-Exchange Health Plan?

Did Your Aging Parent Purchase an On-Exchange Health Plan?

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aging-parent-with-caregiverWhen it comes to the state of health coverage in America today, there's really only one thing everyone agrees on: the system is confusing. With passage and implementation of the Affordable Care Act (ACA), many more Americans now have coverage than before, but providers and insurers have shifted more of the cost burden onto consumers in response.

If you or your aging parent bought an exchange medical plan this year, having up-to-date, unbiased news is one of the most powerful tools for caregivers can use to sort things out.

What is the debate about subsidies?

Under the ACA, Congress legislated that the federal government would issue tax subsidies to defray the cost for Americans of limited to moderate income who buy coverage from state-based health insurance exchanges.

But not all the states set up their own exchanges.

So the debate is essentially this: does the IRS have the right to extend tax credit subsidies in the states where federal government is running exchanges?

Some say that the law, as written, only allows for federal tax subsidies to be paid to people who purchased from state-run exchanges and have even filed suit in Washington D.C. to challenge the IRS' extension of tax credits to purchasers on federally-run exchanges.

At the same time, a similar suit was filed in federal district court in Richmond, Virginia. In July, the judiciary panels in both cases issued conflicting rulings, within hours of each other.

In Washington, the judges struck down the federal government's subsidies to purchasers on federally-run exchanges, issuing a literal interpretation of the ACA that would indicate Congress intended to provide subsidies only to state-run exchange purchasers.

In Richmond, however, the court issued a broader interpretation of the ACA, which upheld the IRS decision to offer credits to all income-qualified applicants and found that Congress' intent was to make health care more affordable for all Americans.

With the lower courts in conflict, the issue is likely to be taken up in the near future by the Supreme Court of the United States— a landmark case with far-ranging implications for the nation's health care system and for future legislation.

Will subsidies be going away?

The Obama administration has directed the IRS to continue crediting tax subsidies to all income-qualifying, on-exchange buyers, regardless of where they purchased health coverage. So, unless the Supreme Court takes up the case and rules against them, or Congress repeals the subsidies provision of the ACA, subsidies are here to stay.

So, here's what you need to know:

  • If you live in a state that runs its own exchange, your subsidies are clearly unaffected, even if the Washington court's strict constructionist interpretation of the ACA eventually stands.


  • If you or your aging parent purchased on-exchange coverage this year, and qualified for income-based tax credit subsidies, you're in the clear for now. There is nothing you need to do at this time and you do not need to cancel and repurchase an unsubsidized, off-exchange plan. Until a firm ruling or legislative change is made, the subsidies will continue.


  • If you purchased an off-exchange plan to begin with, or if your coverage is offered through your employer, this debate has nothing to do with your type of plan.


  • If you or your aging parent is on Medicare or Medicaid and is not covered under a privatized Medicare or Medicaid PPO, you also needn't worry — traditional Medicare and Medicaid plans are unaffected. They are not part of the exchange system.


  • Medicare or Medicaid beneficiaries who purchased an on-exchange, privatized Medicare PPO or Medicaid PPO, or a Medicare / Medicaid supplemental plan, through a state-run exchange are similarly unaffected.


  • If you purchased a Medicare or Medicaid PPO, or supplemental plan, on a federally-run exchange, you will continue to receive any subsidy you may have qualified for, until a firm ruling or legislative change is made.

It's going to be an interesting year. Be sure to follow the news.

But as you do, make sure you turn to unbiased sources. The healthcare debate is one of the most politically-charged issues to arise in America in the past century, and reliable information can be hard to come by.

Be wary of hearsay, social media posts and talking heads on cable networks, and stick to vetted, professional news. Staying in the know and developing a deeper understanding of the law will help you to frame the discussion and inform your stance and your votes.

Regardless of the outcome of the ACA tax subsidy cases, we all need to be better aware of the health care resources that are available to us, so that we can use them wisely and maintain our wellness!

Have questions? Need information? Click here to contact us now.

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Bryan Reynolds

Bryan Reynolds

Bryan Reynolds is the Vice President of Marketing and Public Relations for Episcopal Retirement Services (ERS). Bryan is responsible for developing and implementing ERS' digital marketing strategy, and overseeing the website, social media outlets, a... Read More >

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