Roughly a year ago, we reported on a district court judge’s determination that the Affordable Care Act’s (“ACA”) individual mandate was unconstitutional and that, therefore, the entire ACA was invalid. A detailed summary of the district court’s decision can be found in our December 17, 2018 post. Not surprisingly, this ruling was appealed to the 5th Circuit Court of Appeals.
On December 18, 2019, the 5th Circuit issued its ruling affirming the district court’s determination that the individual mandate was unconstitutional. In 2012, the United States Supreme Court upheld the individual mandate as a constitutional application of Congress’ taxing power. The 5th Circuit agreed with the district court that the individual mandate can no longer stand as a tax given that penalties under the individual mandate were reduced to zero in 2017.
The 5th Circuit, however, was not willing to go as far as the district court and declare the entire ACA unconstitutional. Instead, the 5th Circuit remanded the litigation back to the district court for a detailed analysis on which other provisions of the ACA are severable from the individual mandate and can therefore remain intact. A district court determination that the individual mandate cannot be severed from the rest of the ACA will undoubtedly be appealed to the 5th Circuit and, perhaps, the United States Supreme Court.
Although this litigation will not likely be resolved within the next year or two, it nevertheless creates uncertainty regarding which of the ACA’s other provisions will be invalidated along with the individual mandate. For the time being, what is left of the ACA beyond the individual mandate is still the law, so employers and plan sponsors should continue to comply with the ACA’s coverage mandates and, if applicable, the employer shared responsibility mandate.