Several states have been challenging the Affordable Care Act (ACA) on the grounds that it is an overreaching piece of legislation and that, specifically, the individual mandate is unconstitutional. A January 2020 opinion by the Fifth Circuit agreed that the individual mandate is unconstitutional, but did not answer the subsequent question regarding severability and whether that part can simply be cut from the ACA.
Individual Mandate
While the court also answered a number of other standing questions, the main focus benefits providers and governmental entities have on the ruling is the question of whether the individual mandate is constitutional. This is the portion of the ACA that requires most citizens and legal residents of the United States to have health insurance or pay a penalty. In 2012, the Supreme Court ruled that the mandate was a tax and therefore constitutional. The mandate is enforced as part of an individual’s income taxes.
Those in favor of the individual mandate argue that removing it will lower enrollment in health insurance and lead to higher costs for those who remain enrolled and for the government. The reason is that younger, healthier individuals will choose to forego health insurance, leaving the insured population disparately older and less healthy.
In this case, the plaintiffs argued that the individual mandate required them to purchase insurance they did not want. In the case of the state, the mandate increased the cost of complying with reporting requirements. They argue that the individual mandate can no longer be read as a tax and there is no other way to justify the mandate.
Severability
The Federal Circuit court remanded the case to the district court and asked them to use a “finer-toothed comb” when determining whether Congress intended sections of the ACA to be severable from the individual mandate. If it is determined that they did not mean for the bill to be severable, then the failure of one provision such as the individual mandate results in the unconstitutionality of the entire law. The circuit court also allows that some of the law will be severable while other portions are not.
The team of benefits attorneys at Hall Benefits Law continue to closely watch developments in this case as well as related legislation and regulations. The ACA impacts businesses as well as individuals and the decisions regarding the constitutionality of all or a portion of the law will impact how our clients make benefit decisions and how benefit plans are designed. To learn more about the services we offer, reach out to our team by calling 678-439-6236 or visiting the Hall Benefits Law website.
Hall Benefits Law, LLC
