On December 14, 2018, Judge Reed O’Connor, district court judge in the Northern District of Texas, in Texas v. Azar, struck down the entire Affordable Care Act (ACA). According to Judge O’Connor, when Congress eliminated the tax penalty for failing to comply with the individual mandate, it eliminated the justification that the ACA was a valid exercise of Congress’s taxing power, and, as the individual mandate is essential to and inseparable from the ACA, concluded that the entire ACA is unconstitutional.

Despite this ruling, the ACA remains in full force. The ruling does not halt enforcement of the ACA, and the Department of Health and Human Services has announced that it “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.” This means that individuals can still get coverage through the ACA exchanges, and applicable employers must still provide minimum value affordable coverage to their employees as well as comply with all other ACA mandates.

Additionally, President Trump and some Republican lawmakers are now making renewed calls to pass a new health care bill.  With Democrats taking control of the House of Representatives in January, the future of this effort is uncertain, unless the Court forces it to act by declaring the ACA unconstitutional.

Clients should continue to assume that the ACA applies, but should watch Texas v. Azar closely.  Even if the ACA is not ultimately declared unconstitutional, another Supreme Court decision on the ACA could have a variety of important and far-reaching implications.

For more information about the ACA and how it applies to your companies’ benefit plans, contact your SGR Executive Compensation and Employee Benefits counsel.