Entire ACA Ruled Invalid

On December 14th, a judge in the United States District Court for the Northern District of Texas, Fort Worth Division, ruled that the Affordable Care Act’s (ACA) individual mandate is unconstitutional and that the remaining provisions of the ACA are inseverable and therefore invalid.

The ruling is based upon the change to the individual mandate contained within the 2017 tax reform bill that eliminated the individual mandate’s tax consequences. Under the new law, people who decide against insurance coverage no longer must pay a fine. The District Court’s decision hinged on that change.

While the ruling puts the ACA’s future in jeopardy, the federal government is making no immediate changes to laws and regulations. According to a statement from the Department of Health and Human Services (HHS), the government “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision. They added that the decision “does not require that HHS make any changes to any of the ACA programs it administers…at this time.”

In short, it’s business as usual until Judge O’Connor’s decision makes its way through the court system. A group of states led by California vowed to appeal the ruling and the issue will most likely make its way to the Supreme Court.

The ACA was previously upheld as constitutional by the Supreme Court in 2012. However, the same result is not certain today given the changes in individual mandate laws and a more conservative court.

That said, businesses should continue to comply with the various requirements under the ACA including 1095 reporting, W-2 reporting and minimum essential coverage offerings that meets the value and affordability requirements under the ACA.