Such State-established exchanges are referred to as “State Exchanges.” Section 1321 of the ACA, codified at 42 U.S.C. § 18041, authorizes the Secretary of HHS, directly or through a not-for-profit entity, to establish a “Federally-facilitated Exchange” in any State where a State Exchange is not operating. See also 45 C.F.R. § 155.

Halbig v. Sebelius The Halbig case involved a challenge to an Internal Revenue Service ("IRS") regulation that purports to implement the provisions of the ACA authorizing federal tax credit subsidies to certain consumers purchasing health insurance through a State exchange. Because the tax credit language arguably is limited to coverage purchased through a State exchange, the DC Circuit must decide whether the IRS may promulgate regulations extending such subsidies to consumers who obtained health coverage on an exchange established by the federal government under Section 1321 of the ACA, codified at 42 U.S.C. § 18041. By way of background, the IRS allowed such tax credits in the 34 states that have not established a state exchange and where only an exchange operated by the federal government exists.