King v. Burwell – And now we wait…

Last week, the Supreme Court finally heard oral arguments in the King v. Burwell case, which will decide the legality of delivering premium tax credits through the Federally Facilitated Marketplace. Though the Justices have already met to vote on the case, we’re unlikely to hear the results for several months, probably at the end of June.

The problem is that insurance professionals aren’t very good at waiting. We’re impatient – we want the answers now because our clients want the answers now. They pay us to advise them, and without knowing the full story it’s difficult to give good advice.

So here’s a friendly piece of advice for everyone who makes a living telling clients what they should do: DON’T WAIT! We as an industry have made that mistake before – sitting around waiting for the law to be repealed or otherwise crumble, first with the election of Scott Brown back in 2010, then with the Supreme Court case in 2012, then with the Presidential election and later with the government shutdown.

Waiting to see what happens, while it may seem like the practical thing to do, doesn’t make you any money. And it doesn’t solve any problems for your clients. So the best thing you can do is advise your clients based on what you know today, and then if things change, change your advice.

Here’s what we know now:

1. It’s difficult if not impossible to predict what the Supreme Court will do. That said, we’re pretty confident that four Justices will vote to uphold the subsidies, and Kennedy made some statements that lead many to believe he’ll also vote to uphold. If that happens, the subsidies remain.

2. Even if the Court sides with the plaintiffs, they indicated that they could delay the impact of the ruling for a while, possibly until the end of the year, to give Congress some time to take action. It would be a shame not to help a client save money on health insurance for seven or eight months just because those subsidies could go away someday.

3. Even if the Court tosses out the subsidies through the FFM, a number of states have their own exchange, so the subsidies will be legal there. And other states are looking into the possibility of creating their own marketplace.

4. Congress would likely take action as well if the plaintiffs win. Some Republicans have suggested an 18 month “wind down” period where the subsidies will still be available but will decrease over time. Other proposals would retain the subsidies in the replacement plan but would decrease them to 300% of the FPL.

The truth is that we don’t know what will happen, and since we don’t know, our best bet is to keep moving forward. Those of you who have a private exchange site have invested in a solution that will benefit a lot of individuals, even outside the open enrollment period. With groups continuing to drop coverage and other individuals becoming eligible for a special enrollment period, there are plenty of people to help. And those of you without an individual solution definitely need one – it’s the only way to give unbiased advice to group clients. If all you sell is group health plans, that’s all you’ll recommend, even when they may not be the right fit.

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