Court Denies Request for an Injunction to Prohibit Subsidies in Federal Exchanges

In King v. Sebelius, a group of Virginia residents are attempting to prevent the provision of tax credits in the federal Exchange. They contend that the Affordable Care Act (“ACA”) provides that tax credits are only available in state Exchanges. They argue that the IRS regulation improperly provides for tax credits in the federal Exchange as well as state Exchanges.

Virginia does not have a state exchange. If the tax credits were not available in the federal Exchange, they argue that the insurance would be unaffordable for them. As a result, they say that they would be eligible for an exemption from the ACA’s individual mandate and would not be forced to buy unwanted insurance. The judge for the U.S. District Court for the Eastern District of Virginia ruled that an injunction was not warranted as the individuals were unlikely to be irreparably harmed as a result of the court not issuing an injunction. The case will proceed on the merits.