On Dec. 14, 2018, a federal judge ruled in Texas v. Azar that the entire Affordable Care Act (ACA) is invalid due to the elimination of the individual mandate penalty in 2019. Following the ruling, on Dec. 20, 2018, the federal judge issued a stay and partial final judgment in the case. As a result, the ACA will remain in place pending appeal. The Department of Health and Human Services (HHS) also confirmed that it will continue administering and enforcing all aspects of the ACA.
This lawsuit was filed by 20 states as a result of the 2017 tax reform law that eliminates the individual mandate penalty. In 2012, the U.S. Supreme Court upheld the ACA on the basis that the individual mandate is a valid tax. With the penalty’s elimination, the court in this case ruled that the ACA is no longer valid under the U.S. Constitution.
This ruling is expected to be appealed and will likely be taken up by the Supreme Court. As a result, a final decision is not expected to be made until that time. However, the White House announced that the ACA will remain in place pending appeal.
The ACA imposes an “individual mandate” beginning in 2014, which requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. In 2011, a number of lawsuits were filed challenging the constitutionality of this individual mandate provision.
In 2012, the U.S. Supreme Court upheld the constitutionality of the ACA in its entirety, ruling that Congress acted within its constitutional authority when enacting the individual mandate. The Court agreed that, while Congress could not use its power to regulate commerce between states to require individuals to buy health insurance, it could impose a tax penalty using its tax power for individuals who refuse to buy health insurance.
However, a 2017 tax reform bill, called the Tax Cuts and Jobs Act, reduced the ACA’s individual mandate penalty to zero, effective beginning in 2019. As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage.
Texas v. United States
Following the tax reform law’s enactment, 20 Republican-controlled states filed a lawsuit again challenging the ACA’s constitutionality. The plaintiffs, first, argued that the individual mandate can no longer be considered a valid tax, since there will no longer be any revenue generated by the provision.
In addition, in its 2012 ruling, the Supreme Court indicated (and both parties agreed) that the individual mandate is an essential element of the ACA, and that the remainder of the law could not stand without it. As a result, the plaintiffs argued that the elimination of the individual mandate penalty rendered the remainder of the ACA unconstitutional.
The U.S. Justice Department chose not to fully defend the ACA in court and, instead, 16 Democratic-controlled states intervened to defend the law.
Federal Court Ruling
In his ruling, Judge Reed O’Connor ultimately agreed with the plaintiffs, determining that the individual mandate can no longer be considered a valid exercise of Congressional tax power. According to the court, “[u]nder the law as it now stands, the individual mandate no longer ‘triggers a tax’ beginning in 2019.” As a result, the court ruled that “the individual mandate, unmoored from a tax, is unconstitutional.”
Because the court determined that the individual mandate is no longer valid, it now had to determine whether the provision is “severable” from the remainder of the law (meaning whether other portions of the ACA can remain in place or whether the entire law is invalid without the individual mandate). In determining whether the remainder of the law could stand without the individual mandate, the court pointed out that “Congress stated three separate times that the individual mandate is essential to the ACA … [and that] the absence of the individual mandate would ‘undercut’ its ‘regulation of the health insurance market.’ Thirteen different times, Congress explained how the individual mandate stood as the keystone of the ACA … ‘together with the other provisions’ [the individual mandate] allowed the ACA to function as Congress intended.” As a result, the court determined that the individual mandate could not be severed, making the ACA invalid in its entirety.
Impact of the Federal Court Ruling
Judge O’Conner’s ruling left many questions as to the current state of the ACA, because it did not order for anything to be done or stay the ruling pending appeal. However, on Dec. 20, 2018, the Judge O’Conner issued a stay and partial final judgment in the case, confirming that the ACA will remain in place pending appeal. In addition, this ruling is expected to be appealed, and the White House announced that the ACA will remain in place until a final decision is made. On Dec. 17, 2018, HHS also confirmed that it will continue administering and enforcing all aspects of the ACA. Many industry experts anticipate that the Supreme Court will likely take up the case, which means that a final decision will not be made until that time.
While these appeals are pending, all existing ACA provisions will continue to be applicable and enforced. Although the individual mandate penalty will be reduced to zero beginning in 2019, employers and individuals must continue to comply with all other applicable ACA requirements. This ruling does not impact the 2019 Exchange enrollment, the ACA’s employer shared responsibility (pay or play) penalties and related reporting requirements, or any other applicable ACA requirement.
This ACA Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
As large-scale cyber attacks continue to make headlines on a regular basis, many businesses have started to realize the importance of safeguarding their systems and data. However, hackers will keep exploiting cyber defense trends and new technology to steal valuable information and cause chaos.
Staying aware of developments in cyber security can help your business prepare an effective response plan. Credit reporting agency Experian recently released its 2019 data breach industry forecast, which predicts the five biggest cyber threats for the year:
- Biometrics—Device manufacturers like Apple, Google and Samsung have started to use biometric scanners as a more secure form of authentication. But as fingerprint and facial recognition systems become more popular, hackers will start to target servers that store biometric data.
- Digital skimming—Criminals have used skimmers to steal credit card information for decades, but hackers are looking at a digital version of this crime that can target e-commerce websites.
- Wireless carriers—Recent security tests have found that hackers can infiltrate the signaling platform that allows wireless carriers to connect to each other. As a result, hackers may be able to start a large-scale attack on a motor carrier and remotely access data on smartphones.
- Cloud vendors—Hackers have targeted cloud computing systems
before,but mostly focus on individual businesses instead of the service providers. If a large cloud vendor is attacked, it could expose data from thousands of businesses that assumed their data was safe.
- Gaming—Nearly a quarter of the world’s population play games, according to Experian. And since games require downloading third-party software and setting up anonymous accounts, hackers can easily infiltrate systems to install malware or steal financial information.
Contact an advisor today, to learn how to mitigate threats.
It can be difficult to avoid getting sick at work, particularly if you work in close quarters. While you may not be able to avoid germs altogether, the following tips can help reduce your risk of getting sick:
- Wash your hands. Germs can cling to many surfaces in the workplace, including elevator buttons, doorknobs and refrigerator doors. To protect yourself from illness, it’s important to wash your hands regularly, especially before you eat or after you cough, sneeze or use the restroom.
- Keep your distance. Illnesses like the cold or flu can spread even if you aren’t in close contact with someone. In fact, experts say that the flu can spread to another person as far away as 6 feet. If you notice a co-worker is sick, it’s best to keep your distance.
- Get a flu shot. Yearly flu shots are the single best way to prevent getting sick. Contrary to popular belief, flu vaccines cannot cause the flu, though side effects may occur. Often, these side effects are minor and may include congestion, coughs, headaches, abdominal pain and wheezing.
In addition to the above, it may be a good idea to avoid sharing phones, computers and food with your co-workers during flu season. Together, these strategies should help you stay healthy at work.