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The ACA Remains in Place Pending Recent Appeal

January 23, 2019

Federal Judge, Reed O’Connor, recently ruled that the entire Affordable Care Act (ACA) is invalid due to the elimination of the individual mandate penalty this year.  The individual mandate penalty was reduced to zero starting in 2019 as a part of the 2017 tax reform bill, Tax Cuts and Jobs Act.  Therefore, individuals will no longer be penalized for failing to secure health insurance coverage*.  However, the White House announced that the ACA will remain in place pending a likely appeal to the ruling, and the Department of Health and Human Services (HHS) will continue to execute and enforce all aspects of the ACA.

The Federal Court Ruling

The ruling was in response to Texas v. United States where 20 Republican-controlled states filed a lawsuit following the tax reform law’s enactment challenging the ACA’s constitutionality.  The argument made by the plaintiffs was that the individual mandate can no longer be considered a valid tax since there will be no revenue generated.  It is important to keep mind the Supreme Court’s 2012 ruling, which both parties agreed, the individual mandate is an essential aspect of the ACA, and that the law could not be sustained without it.

Congress was insistent on how the individual mandate was the keystone of the ACA and the absence of this mandate, and in conjunction with the other provisions, would undermine the law and not allow it to function as intended.  As a result of the individual mandate’s elimination in 2019, federal Judge O’Conner agreed with the plaintiffs and ruled that the ACA is invalid in its entirety.

What happens now

Many in the industry anticipate the Supreme Court again taking up the case of the ACA and all final decisions will be on hold until that time.  Until then, the following cannot be emphasized enough, even though the individual mandate penalty will be reduced to zero commencing January 1, 2019*:

  • Employers and individuals must continue to comply with all other applicable ACA requirements;
  • all existing ACA provisions will continue;
  • this ruling does not impact the ACA’s employer shared responsibility (pay or play) penalties, related reporting requirements, and other applicable requirements of the ACA.

Although the ruling left many wondering about the future of the ACA, it is best to keep a “business as usual” mindset for the foreseeable future.  Contact your broker or consultant to discuss any questions that may arise surrounding your group health plans and compliance with the ACA.

*It is important to note the State of New Jersey law enacted in 2018, New Jersey Health Insurance Marketplace Preservation Act, does have an individual mandate requiring all to obtain coverage or pay a penalty.


For more information regarding an Employee Benefits program for your business or organization, contact Jason Della Penna, Executive Vice President at Brown & Brown Benefit Advisors,


“This content is strictly informational and should not be used as specific advice on insurance products, legal, accounting and/or tax related matters. Insureds should always contact the appropriate licensed professional for their insurance, legal, accounting or tax needs.”

Brown & Brown Benefit Advisors