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July 03, 2013

What Is The Obamacare Employer Mandate? When Does It Start? Who Can Sue?

I'm seeing a lot of questions about the Obama Administration's decision to delay enforcement of the employer mandate. Ace has already covered the awful precedent, the questionable politics, and the all-around failure of Obama's signature legislation. This is meant more to answer some of the legal-ish questions that keep popping up.

First, a lot of folks aren't totally clear on what the employer mandate is. What we call "the employer mandate" is actually a monthly IRS reporting requirement for certain employers (generally, those with more than 50 full-time employees) created by ACA sec. 1513. Covered employers who fail to report or do not meet the requirements for affordable care must pay a penalty to IRS (or, if you like, a tax).

Second, there is no independent provision requiring the covered employers to provide health insurance to their employees. There is only the IRS reporting mandate and its corresponding penalty. (The reason for this type of construction is that it would be unconstitutional for the federal government to force employers to provide insurance. The federal government can only incentivize it using the tax code.)

Third, ACA sec. 1513 does a couple things. But for our purposes, the one we care about is that it amends the tax code (which is really a statute) to include the provisions I've described above. Remember: these tax code changes create a monthly reporting requirement. And, ACA sec. 1513(d) provides explicitly when that monthly reporting requirement shall apply. “The amendments made by this section shall apply to months beginning after December 31, 2013." Contrary to several media reports, there is no discretion in the law about that December 31, 2013 date. The monthly reporting requirements apply "to months beginning after December 31, 2013," which includes all months in the year 2014.

Fourth, folks are asking about lawsuits. As you probably know, general "taxpayer lawsuits" are not entertained by the federal courts; taxpayers lack standing to challenge government action that affects everyone equally. Some folks are suggesting that employees who lack employer coverage in 2014 could sue. First, they'd be suing their employers, presumably, not the federal government. And second, such suits would be doomed to failure; as I discussed above, there is no indepenent requirement that employers provide their employees with health insurance coverage. There is only the reporting mandate and penalty, which Treasury has said it will not enforce in 2014.

One possibility for a lawsuit where someone might actually have standing is if a member of Congress who voted for the law sues. A Supreme Court case from back during the struggle over the line item veto, Raines v. Byrd, also leaves open the possibility that any member of Congress might sue, but that's a longer shot. As we just saw in the Perry decision, the Chief Justice and Justice Scalia aren't all that keen on expanding the doctrine of standing.

What happens next? I really don't know.

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posted by Gabriel Malor at 10:49 AM

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