Last Updated on October 9, 2020

Affordable Care Act Update: Appeals Court Debates Constitutionality of the ACA

On July 9, 2019, one of the latest challenges to the Affordable Care Act (ACA) continued in the 5^th Circuit Court of Appeals in New Orleans.

How the ACA ended up here

In 2017, Congress eliminates the penalty associated with the individual mandate. Because of the elimination of the penalty, a lawsuit emerges to overturn the ACA.

In December 2018, U.S. District Judge Reed O’Connor of the Northern District of Texas, rules the elimination of the individual mandate penalty claims the ACA is unconstitutional in its entirety. However, the ruling does not end the enforcement of the ACA. The Trump administration states they will enforce the ACA until there is a final ruling. This ruling is almost immediately appealed to the 5^th Circuit Court of Appeals in New Orleans.

In May 2019, the U.S. Department of Justice (DOJ) states they support the lower court’s decision and urges the Court of Appeals to strike down the ACA in its entirety. Since the DOJ refuses to defend the law, a coalition of 21 Democratic Attorney Generals, along with the House of Representatives, step in to defend the law in the Court of Appeals.

Current Status of the ACA appeals

On July 9, 2019, the 5^th Circuit Court of Appeals hears arguments on whether the lower court’s ruling should stand. The panel of appellate judges consists of two Republican appointed judges and one Democratic appointed judge. The 3 questions at the heart of the hearing were:

1. Is the Individual Mandate constitutional without a tax penalty?

   A primary point in Plaintiff’s the case is the Individual Mandate component is only constitutional with a corresponding tax penalty. Without the tax penalty, the Individual Mandate would be unconstitutional and therefore must be struck from the ACA.

2. If the court deems the the Individual Mandate unconstitutional, should the ACA be struck down in its entirety as ruled by Judge O’Connor?

   Judge O’Connor’s ruling says the different provisions of the ACA are to work together. Therefore, if one of the provisions is stricken, the entire ACA must be stricken.

3. Do the 21 Democratic Attorney Generals and the House of Representatives have the standing to appeal the ruling?

   In order to defend the ACA, the defendants must have been harmed. One of the primary questions is whether the States, with representation from 21 Democratic Attorney Generals and the House of Representatives, will experience harm by the ruling. If the Court of Appeals deems that they do not have standing to defend the law, they could let the ruling stand or vacate the ruling.

It is important that business owners continue to comply with the ACA. They must be diligent in meeting the Act’s requirements – or face potentially significant penalties.

Where the ACA issue stands now

We anticipate that it will likely take the Court of Appeals months to render a decision. Then, regardless of the time it takes to make a decision, we anticipate the ruling will be go to the Supreme Court on appeal. The Supreme Court would then need at least four justices to agree to hear the case. If four justices agree to hear the case, they anticipate that the earliest the Supreme Court may hear the case is 2020.

While the cases are ongoing, the Trump administration has stated they will enforce the law. Therefore, it is important that business owners continue to comply with the ACA. They must be diligent in meeting the Act’s requirements – or face potentially significant penalties.

Comply with Affordable Care Act Updates with MyHRConcierge

MyHRConcierge offers ACACompli, a service designed to help small to mid-sized businesses throughout the United States remain compliant with ever-changing rules and regulations surrounding the Affordable Care Act and the Employer Mandate.

Contact us for more information on the ACA and how it relates to the climate of Human Resources. Chris Cooley is co-founder of MyHRConcierge and SMB Benefits Advisors.

MyHRConcierge also offers support for terminating and offboarding employees, COBRA administration, and contesting state unemployment insurance claims. Chris can be reached at (855) 538-6947, ext. 108 or at ccooley@myhrconcierge.com.