Appeals court throws out IRS rule on Obamacare subsidies

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Appeals court throws out IRS rule on Obamacare subsidies
This image taken March 31, 2014 in Washington, DC shows a page on the internet site, indicating that the site is too busy for the amount of traffic.Today is deadline day for uninsured Americans to sign up for coverage through US President Barack Obama's signature healthcare law, the Affordable Care Act. AFP PHOTO / Karen BLEIER (Photo credit should read KAREN BLEIER/AFP/Getty Images)

(Reuters) - A U.S. appeals court on Tuesday threw out a federal regulation that implements key subsidies that are vital to President Barack Obama's healthcare overhaul.

The U.S. Court of Appeals for the District of Columbia Circuit accepted one of the main legal challenges to the policy by conservatives opposed to an expansion of the federal government. A three-judge panel returned the case to a lower court with instructions to rule in favor of appellants who had sued to overturn the rule.

The ruling has the potential to cripple the implementation of the law by making health insurance unaffordable for many people.If the Obama administration appeals, the case could yet end up before the U.S. Supreme Court.

The subsidies, in the form of tax credits, are available to people with annual incomes of up to 400 percent of the federal poverty level, or $94,200 for a family of four.

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