The individual mandate provision of the 2010 health care reform law is unconstitutional, the U.S. Court of Appeals for the Eleventh Circuit decided in Florida v. HHS on August 12th. The Sixth Circuit previously held in Thomas More Law Center v. Obama that the individual mandate is constitutional. Therefore, the Eleventh Circuit decision creates a circuit split, making it more likely that the U.S. Supreme Court will tackle the issue.
The law’s individual mandate requires individuals to maintain a specific minimum level of health insurance coverage beginning January 1, 2014, or pay a federal tax penalty for each month in which such coverage is not maintained. The law also requires an individual taxpayer to maintain the minimum required coverage for his or her dependents.
The Eleventh Circuit upheld a lower federal court’s decision that Congress exceeded its commerce clause powers in enacting the individual mandate because Congress cannot “mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”
However, the lower court had declared the entire health care reform law invalid because it found the unconstitutional individual mandate to be legally non-severable from the rest of the law. The Eleventh Circuit disagreed, deciding that the individual mandate could be severed from the rest of the health care reform law.
Despite the Eleventh Circuit’s decision on the legal severability issue, the individual mandate is one of the central tenets on which the health care reform law is based; thus, without it, the health care reform initiative will fail to achieve principle goals.
The fate of health care reform rests with the U.S. Supreme Court at this point. We will continue to monitor health care reform legal challenges that are pertinent to employers. Meanwhile, the health care reform law provisions that directly impact employers and their group health plans remain “the law of the land,” so employers should continue to comply with applicable provisions and prepare for compliance with provisions having future effective dates.
Jackson Lewis LLP’s interdisciplinary Health Care Reform task force provides guidance to employers and plan sponsors regarding obligations and strategies under the health care reform law and related laws. For more information about our resources in this area, please contact Monique Warren (White Plains, warrenm@jacksonlewis.com), Joe Lazzarotti (White Plains, lazzaroj@jacksonlewis.com), or Lisa deFilippis (Cleveland, defilipl@jacksonlewis.com).