Why Today’s Obamacare Ruling Is Such A Big Deal

Just a quick note for those who may be confused about how those Obamacare tax credits actually worked — and a glimpse at why this is such a big deal.

The way it worked, in short, is this:

Purchasers of insurance shopped on the marketplace for policies with a variety of price points for premiums. They selected their preferred policy, enrolled for it, and then had to pay their first premiums within a set amount of time. Those premiums were already reduced for people who were estimated to qualify for tax credits.

The tax credits were estimated based on the personal financial information the purchaser provided upon enrollment. So in short the tax credit was received immediately and applied to the monthly premiums due. The exact amount of tax credit that the purchaser qualified for and their precise personal financial information would be confirmed and reconciled when the purchaser filed their next year’s federal income tax return.

So if today’s ruling stands, a big question is will purchasers have to pay the difference between the subsidized premium they originally received and the unsubsidized actual price? If so, when? And how?

You can see the practical and political nightmare today’s ruling creates.