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ACA Struck Down by Federal Court, but Will Remain in Place Pending Appeal

On Dec. 14, 2018, a federal judge ruled in Texas v. United States that the entire ACA is invalid due to the elimination of the individual mandate penalty in 2019. Following this decision, the White House announced that the ACA will remain in place pending appeal.

This lawsuit was filed by 20 Republican-controlled states as a result of the 2017 tax reform law that eliminates the individual mandate penalty. In 2012, the U.S. Supreme Court upheld the ACA on the basis that the individual mandate is a valid tax. With the penalty’s elimination, a federal judge ruled that the ACA is no longer valid under the U.S. Constitution.

This ruling will likely be taken up by the Supreme Court, and a final decision is not expected to be made until that time. While these appeals are pending, all existing ACA provisions are expected to be applicable and enforced. Although the individual mandate penalty will be reduced to zero beginning in 2019, employers and individuals must continue to comply with all other applicable ACA requirements. This ruling is not expected to impact the 2019 Exchange enrollment, the ACA’s employer shared responsibility (pay or play) penalties and related reporting requirements, or any other applicable ACA requirement at this time.

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Holly Hanes