On December 14th 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. Therefore, all requirements pertaining to employers, including the employer mandate (“play or pay”) and employer information reporting rules (Forms 1094-C and 1095-C), continue to be in effect.
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 With the penalty’s elimination, a federal judge ruled that the ACA is no longer valid under the U.S. Constitution.
The decision in Texas will be appealed. It is expected that the case will be heard by the Fifth Circuit Court of Appeals and then eventually the U.S. Supreme Court. It may be worth noting that five Supreme Court justices, including Chief Justice John Roberts, who upheld the ACA in both 2012 and 2015, continue to sit on the high court.
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 does not currently 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.