On Friday, December 14, 2018, a federal judge ruled that the entire Affordable Care Act (ACA) is unconstitutional. Last year, a change in the federal tax law eliminated or zeroed out the individual mandate penalty. The individual mandate penalty imposed a tax penalty on individuals who did not have acceptable health insurance coverage. Mandatory coverage was a core part of the original (ACA) law and the Supreme Court has upheld the ACA as constitutional based upon Congress’s taxing power.
Because the mandate has been zeroed out, it no longer generates revenue as a tax. The argument in the court is that since the mandate is essential to the law it cannot be separated from the ACA and it makes the entire ACA invalid.
Note that this ruling was a declaratory judgement, meaning that it is not binding or enforceable at this time. The ruling is expected to be appealed and the process could take as long as a year. For now, the White House announced that the ACA will remain in place until a final decision is made. All existing ACA provisions will continue to be applicable. The ruling doesn’t impact the 2019 Exchange enrollment, employer shared responsibility (pay or play) penalties, or related reporting requirements.