A recent Federal Court decision turned back a potentially debilitating challenge to the Affordable Care Act’s rules governing premium subsidies. The decision, Halbig v. Sebelius, has consequences for large employers, i.e., those that are subject to the Act’s employer shared responsibility or “pay-or-play” rules. The dispute giving rise to the claim before the court related to a final IRS regulation (26 C.F.R. § 1.36B-2) authorizing the grant of premium tax credits to low- and moderate-income individuals who qualify for and purchase qualified plan coverage under either a state-run public exchange or a “federally-facilitated” public exchange (i.e., an exchange operated by the Department of Health and Human Services in a state that declines to establish its own public exchange).

The nub of the challenge involved the language of Internal Revenue Code Section 36B, which calculates the amount of the premium tax credit based in part on the premium expense for the health plan. Here’s how we explained it previously:

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