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June 14, 2021
On June 17, 2021, the U.S. Supreme Court rejected a lawsuit challenging the constitutionality of the Affordable Care Act’s (ACA) individual mandate in a 7-2 ruling.
This lawsuit was filed in 2018 by 18 states as a result of the 2017 tax reform law that eliminated the individual mandate penalty. In 2012, the U.S. Supreme Court had upheld the ACA on the basis that the individual mandate is a valid tax. With the penalty’s elimination, the appeals court in this case determined that the individual mandate is no longer valid under the U.S. Constitution.
No Changes Expected for 2021 ACA Reporting
As a result of the Supreme Court’s ruling, all existing ACA provisions—including the pay or play rules and related reporting requirements—remain in place. This means that employers must continue to comply with all applicable requirements, or may face penalties for any failure to comply.