On Thursday, June 25, the Supreme Court handed down one of itsmost momentous decisions for employers in years. In simple terms,"Burwell" (Obamacare) won, and "King" (the plaintiffs) lost.

In a case that has grabbed national attention since argumentswere made in front of the Court in March, the Supreme Court hasrules that the Affordable Care Act may provide nationwide taxsubsidies designed to help poor and middle-class people purchasehealth insurance.

The ruling was six in favor of "Burwell," three in favor of"King." In writing the majority opinion, Chief Justice John G.Roberts, Jr., wrote that the words in question "an exchangeestablished by the state" must be understood as part of a largerstatutory plan. "In this instance, the context and structure of theact compels us to depart from what would otherwise be the mostnatural reading of the pertinent statutory phrase."

Some background: The ACA was set up to encourage each state toset up its own exchange. If it did not, individuals in those statescould purchase insurance from a specially set-up Federalexchange.

Since that time, 34 states declined to set up their owninsurance exchanges and were placed into a Federal exchange; 13states, plus the District of Columbia, set up their own healthinsurance exchanges; and the remaining three states have statemarketplaces, but use the Federal exchange to determine subsidyeligibility.

The ACA also included language such that lower-incomeindividuals whose incomes fall within a set range would be eligiblefor premium assistance tax credits to purchase health insurance"through an exchange established by a state." The statute did NOTsay that such credits would be available for purchases made throughexchanges established by the Federal government.

However, in 2012, two years after the passage of the ACA, theInternal Revenue Service issued a rule stating that the tax creditswould be available to purchases not just under state exchanges, butalso in the states in which the Federal government operates theexchange.

This led to a challenge to the IRS's rule that extended ACAexchange subsidies to otherwise qualifying individuals who purchasecoverage on the Federal exchange, not just state exchanges. Thesuit claimed that the IRS acted illegally by extending healthinsurance subsidies to people in states operating under the Federalexchange. It argued that ACA language stipulates that insurancesubsidies should only be available in states that set up their ownexchanges, not states that rely on the Federal exchange.

If the plaintiffs had won, the employer mandate would be void inthe states utilizing the Federal exchange, because employers couldnot be penalized if their workers went to the exchanges forinsurance. In other words, no exchange subsidies would mean noemployer mandate penalties. In sum, employers in the states thatdid not set up their own exchanges would be exempt from theemployer mandate, because no federal outlays would be made totrigger the penalty.

In response to the ruling, Rep. Steve Chabot (R-OH), chair ofthe House Small Business Committee, made the following statement:"For the last five years, Washington has tried to figure out what'sactually in Obamacare. If you really want to understand Obamacare,you don't have to sift through the thousands of pages ofpoorly-designed and ineptly-implemented law. You just have to lookat your premium statement. You have to look at hour health carebills. Americans and small businesses tell us every day how thislaw is burdening them."