Early next year, the U.S. Supreme Court is scheduled to hear oral arguments in a case that labor law and health care benefit advisers say could affect the Affordable Care Act’s strict employer mandate penalties.

Arguments are scheduled to begin for King v. Burwell at 10 a.m. on March 4, a court spokesperson confirmed. The Court will answer whether consumers who use the public marketplace can receive premium tax credits in states that have not established their own exchange and use the federal HealthCare.gov option. Language in the ACA states that these credits can only be given to those enroll into an exchange established by states.

Behind the subsidy discussion is a provision of the ACA that will likely limit the stiff penalties of failing to comply with the health care law. Jean C. Hemphill, a partner in Ballard Spahr’s Philadelphia office, notes that those penalties associated with the employer mandate will likely be shot down if the Court finds that the Internal Revenue Service’s final rule extending premium tax credits to individuals on the federal exchange was an “arbitrary and capricious action.”

“Both types of employer mandate penalties are triggered only when an employee enrolls for coverage in an exchange plan and receives a premium tax credit or cost-sharing reduction,” Ms. Hemphill said. “If no premium tax subsidies are payable in those states, the employer mandate penalties will never be triggered in those states. There will be no penalty for violating the employer coverage mandate in those states.”

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