On Friday, December 14, 2018, Texas-based U.S.Federal Court judge Reed O’Connor ruled that the Affordable Care Act (ACA), also known as Obamacare, is unconstitutional. How did this come about? This decision was the result of a lawsuit brought by Republican officials in 20 states. The judge’s decision reads, in part: “The court finds the individual mandate can no longer be fairly read as an exercise of Congress’s tax power and is still impermissible under the interstate commerce clause – meaning the individual mandate is unconstitutional…[T]he court finds the individual mandate is essential to and inseverable from the remainder of the ACA.”
What does this mean? Most likely, this decision will be appealed, possibly all the way to the U.S. Supreme Court, which implies for now that the ACA remains in effect. The law requires individuals to enroll in health insurance that meets minimum standards or pay a penalty for not having coverage. Tax reform, signed into law in 2017, eliminates the no-coverage penalty starting in 2019. Further, the Employer Mandate was not impacted by the 2017 tax reform legislation. Those employers who are required to offer insurance to full-time employees must continue to do so and report it on Form 1095 in 2019.
The bottom line: for now, nothing has changed in the day-to-day operation of the Affordable Care Act. Follow us on LinkedIn and Facebook where we will publish updates on this important issue as developments occur.