Ask The Taxgirl: Health Care Bill Unconstitutional?

Taxpayer asks:

I heard today that the courts ruled Obamacare unconstitutional. Does that mean that we don’t have to worry about those new 1099s now?

taxgirl says:

There are a couple of pieces to this question.

First things first: the health care bill is still law. Procedurally, what happened was that a federal court in Virginia struck down the “individual mandate” portion of The Patient Protection and Affordable Care Act (the “Act” for short or what you and I call the “health care bill”). You can find that language at section 1501 of the Act which says in part:


(a) Requirement To Maintain Minimum Essential Coverage. — An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.

Judge Henry Hudson (yes, historians feel free to giggle) addressed a challenge to that section in Virginia by ruling that individuals could not be forced to purchase coverage. His ruling did not invalidate the entirety of the Act and in fact, probably doesn’t mean a whole lot right now. The case is Virginia v. Sebelius (you can download the Judge’s opinion here as a pdf) if you want to check it out.

You can bet this one is headed to the Supreme Court. The Supremes haven’t agreed to hear any challenges to the Act yet but I think we’re all in agreement that this might be the case to change that. For now, however, the Act is still law.

All of that said, even if the section were actually ruled unconstitutional at the Supreme Court level, that doesn’t mean that the entire Act would be chucked. Arguably, that section (1501) is a necessary part of the Act to function as originally envisioned – and clearly wiping it out kind of makes the whole idea of universal health care fall apart – but it doesn’t change Congress’ beloved add ons. In other words, Judge Hudson’s ruling didn’t touch the form 1099 provision and any challenge to the Act based on Hudson’s ruling won’t address it either. A challenge to the 1099 provision of the health care bill will have to come from Congress.

Like any good lawyer, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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