Perhaps before the year-end holidays kicked in, you might have noticed that on Friday, December 14, 2018, a Texas judge struck down the Affordable Care Act (“ACA”) as unconstitutional in its entirety. The judge held that since 2017’s tax bill effectively eliminated the penalty for violations of the ACA’s individual mandate that required most Americans to obtain some form of health insurance, it became an unconstitutional tax. Then, he concluded, because the law had no severability clause, the entire ACA was unconstitutional.
Legal scholars of various perspectives seemed to agree prior to the ruling that this argument, made by 20 Republican state attorneys general, was specious at best. Judge Reed O’Connor, however, found it persuasive. Judge O’Connor found that the mandate was so integral to the law that Congress would not have passed the ACA without it. This case is going to be appealed (and most likely will end up going all the way to the U.S. Supreme Court). But, the question, for now, is what do employers do in the meantime?
Importantly, since the reduction of the penalty did not occur until 2019, the law remained constitutional through year-end. Additionally, once the case is appealed, it is highly likely the Fifth Circuit Court of Appeals will stay the ruling pending its decision, which could itself take many, many months. And further appeal to the Supreme Court would take years.
Furthermore, because the ACA is so essential to the way the American healthcare system currently runs, a complete nixing of the law would be nearly impossible, from a practical and logistic perspective. Thus, it is highly unlikely anything will change for some time. Therefore, Employers should continue to abide by the ACA’s coverage and reporting requirements – and keep your eyes and ears open for any future changes, whether from the courts or from Congress.