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U.S. Supreme Court Dismisses Affordable Care Act Case; ACA Remains in Effect, Along with ESR Provision

The U.S. Supreme Court in California v. Texas held that the plaintiffs do not have standing to challenge the constitutionality of the Affordable care Act’s (ACA) individual mandate and the validity of the entire law. The ruling dismissed the lower court’s ruling and the entire case. The ACA continues to be the law of the land.
Gavel and stethoscope represents healthcare in the court system

The U.S. Supreme Court, in a 7-2 decision on June 17, 2021, ruled that the plaintiff states and individuals do not have the legal standing to challenge the Affordable care Act’s individual mandate provision and the validity of the entire law. Based on the decision, the Court dismissed the lower court’s ruling and the entire case. It didn’t opine on other issues, including the constitutionality of the individual mandate without an associated penalty.

The Court found the plaintiff’s did not have legal standing to bring the lawsuit since they did not show a “personal injury fairly traceable to the defendant’s allegedly unlawful conduct” nor that the injury could only be remedied by the requested relief.

The Court’s decision dismissed the 2019 federal appeals court decision that agreed with a federal district court in Texas that the ACA’s individual mandate provision became unconstitutional when the 2017 Congress reduced the penalty to zero ($0) and it could no longer be considered a tax under Congress’ taxing authority.

Unlike the Texas court did in its 2018 decision, the appeals court did not invalidate the ACA.

As part of the appeals court ruling in 2019, the case has been remanded back to the lower court to further analyze which ACA provisions are so intertwined with the individual mandate provision that they cannot be separated.

What do employers and individuals need to do about ACA?

The ACA is in effect and continues to be the law of the land. In addition to meeting their obligations under the ESR provision of the ACA, employers should note that gathering complex data across multiple departments from payroll and benefits through human resources can be time consuming. Employers should not delay or dismiss meeting their obligations as the penalties can be hefty and the response to the IRS is difficult and time-consuming if the information was not accurate the first time. 

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Laurie Savage is Senior Compliance professional, leading robust legislative research efforts analyzing intricate policy, including the Affordable Care Act (ACA), paid leave, tax reform and recently, legislation responding to the COVID-19 pandemic.
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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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