On December 14, in Texas v. United States, a District Court judge in the Northern District of Texas held that the Affordable Care Act (“ACA”) violates the United States Constitution. Where does this leave employers who have over 50 employees and are providing health coverage to their employees and/or limiting the number of hours their employees may work due to the ACA employer coverage mandate?
The District Court held that the individual mandate provision of the ACA requiring individuals to obtain health insurance or pay a penalty to the IRS is “essential to and inseverable from” the rest of the ACA. The Court held that when Congress reduced the penalty to -0- as part of the Tax Cuts and Jobs Act (“TCJA”) in 2017, entire ACA became unconstitutional. In NFIB v. Sebelius, 567 U.S. 519 (2012), the U.S. Supreme Court held that the ACA would be unconstitutional under the Commerce Clause, but upheld the law as a valid exercise of Congressional taxing power based on the law’s individual mandate provision. The District Court in Texas issued a declaratory judgment that the ACA is unconstitutional, but then refused to issue the requested nation-wide injunction on the ACA. Following the December 14 decision, the court was asked to clarify its ruling and to indicate whether the order was intended to be a final appealable order which could be appealed immediately to the Fifth Circuit Court of Appeals. Following the December 14 decision, the court was asked to clarify its ruling and to indicate whether the order was intended to be a final appealable order which could be appealed immediately to the Fifth Circuit Court of Appeals. On December 30, 2018, Judge O’Connor responded to this request for clarification by issuing a partial final judgment and a stay on his December 14th decision, making it clear that the decision could immediately be appealed to the Fifth Circuit.
While this case is litigated through the federal court system and until the decision is affirmed by the higher courts, employers with 50 or more full-time employees should maintain the status quo and continue to comply with all aspects of the ACA, including providing coverage to their employees. If the District Court decision is upheld by the higher courts, however, there are several implications for employers, including that large employers with 50 or more employees would no longer be required to offer minimum essential coverage to 95% of their full-time workforce or to provide coverage to their employee’s adult dependent children to age 26. As this important litigation progresses through the courts, if you have any questions regarding compliance with the ACA, or any other employee benefits questions, please contact Matt Stokely or Kristina Curry at Pickrel, Schaeffer & Ebeling.