ACA News & Publications

ACA Pathways: Texas District Court Rules ACA Unconstitutional

December 17, 2018

On December 15, 2018, the U.S. District Court for the Northern District of Texas issued a ruling that has sent shockwaves across the country when it sided with Republican governors from the State of Texas and 19 other states that sued the federal government challenging the constitutionality of the Affordable Care Act (ACA).

The lawsuit alleged that because the individual mandate penalty had been reduced to zero when the Tax Cut and Job Acts bill was passed late last year, the individual mandate is now technically unconstitutional, given that the individual mandate had been the central basis for the Supreme Court upholding the ACA, and as a result, all of the ACA should be struck down. The judge agreed, stating "that the individual mandate [requiring people to have health insurance] can no longer be read as an exercise of Congress' tax power and is... unconstitutional," and the remaining provisions of the ACA are invalid as the individual mandate is essential to and inseverable from the remainder of the ACA.

Thus, the status of the health insurance of nearly 17 million Americans who obtain coverage in the Marketplace is potentially at risk, as are ACA requirements, including to provide essential health benefits, no exclusion for pre-existing conditions or annual or lifetime limits, to cover adult children to age 26, for large employers to offer affordable coverage with minimum value to employees working 30 hours per week or more or pay a penalty and the related employer reporting requirements.

The decision is likely to be appealed all the way to the U.S. Supreme Court, however, at this point, the Trump Administration had indicated that the ACA will remain in effect as the appeal process works its way through the courts. While most legal experts that have weighed in on this decision have called into questioned the District Court's rationale striking down the whole law, this decision nonetheless poses yet another serious challenge to the ACA and has created added uncertainty and confusion to a healthcare system already feeling the impact of a series of legislative and administrative steps taken by Congress and the Trump Administration over the past two years to weaken the ACA.

Impact To Employers

The ACA, a political hot potato since its passage, once again is moved to the forefront of our domestic discourse. As this case makes its way through the appeal process, as anticipated, Burnham Benefits will be closely monitoring and keep employers advised of developments as they arise. Until then, however, employers should approach this as business as usual, and continue to prepare for upcoming requirements and deadlines to ensure full compliance with the law.

For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:

Burnham Benefits

Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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