In the much anticipated decision State of Texas v. United States of America, et al., the US Court of Appeals for the Fifth Circuit upheld a district court ruling that the individual mandate under the Affordable Care Act (ACA) is unconstitutional. Because the Tax Cuts and Jobs Act of 2017 zeroed out the federal tax penalty under the individual mandate, effective January 1, 2019, the Fifth Circuit concluded that since there is no longer a penalty or tax resulting from the individual mandate, the mandate can no longer be sustained constitutionally under Congress’s taxing power.
Despite its definitive ruling on the constitutionality of the individual mandate, the Fifth Circuit was not prepared to rule on the most anticipated issue of the case: whether the rest of the ACA is inseverable from the individual mandate, which could result in a holding that the ACA is unconstitutional. Instead, the Fifth Circuit remanded the case to the district court for a ruling on this issue. In doing so, the Fifth Circuit directed the district court to conduct a “finer-toothed comb” inquiry into the issue of severability.
There is no immediate action that group health plan sponsors need to take as a result of the Fifth Circuit’s decision. The ACA wars continue, and for the next episode, patiently wait we must.