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PPACA is Unconstitutional and 1099 Reporting May Go Away (a rough week for reform)
Last week was a particularly rough week for health care reform as PPACA took some serious hits.  First, Judge Roger Vinson from the US District Court for the Northern District of Florida ruled that PPACA was unconstitutional as a whole.  The case was brought by 19 states claiming that [...]



PPACA is Unconstitutional and 1099 Reporting May Go Away (a rough week for reform)

Benefits, Keith R. McMurdy
Posted by McMurdy, Keith at Monday, 02/07/2011 8:48 am
 
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Last week was a particularly rough week for health care reform as PPACA took some serious hits. 

First, Judge Roger Vinson from the US District Court for the Northern District of Florida ruled that PPACA was unconstitutional as a whole.  The case was brought by 19 states claiming that the statute was unconstitutional.   Because the mandate requiring individuals to buy insurance would penalize individuals who choose not to, Judge Vinson reasoned that "[i]t would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause" of the Constitution.  Moreover, Judge Vinson ruled that because the individual mandate is "inextricably bound" to the remainder of the Act, it cannot be severed from the rest of the law.  Thus, the judge's ruling strikes down the entire health care reform law.

This decision should not have an immediate impact on employers.  There is no restraining order or any restriction on the government continuing to implement the law.  Plus the decision is likely to be appealed to the U.S. Court of Appeals for the 11th Circuit.  This decision represents the fourth federal district court to rule on constitutionality of PPACA, and the split is even at 2 -2.

Then, the U.S. Senate, though refusing to repeal PPACA completely, did, by 81-17 vote, pass an amendment that would repeal the 1099 clause, which requires businesses to file a 1099 form with the IRS each time they spend more than $600 a year by purchasing products or services from any other business.   The reporting provision that was slated to go into effect in 2012 would have significantly expanded the 1099 reporting requirements and was generally seen as bad for businesses generally.  Although it has not been finalized as yet, it is expected that the amendment will pass both houses and be signed by the President without much delay.

So when dealing with PPACA, remember that when regulators actively make a change (like delaying the W-2 reporting requirement or eliminating the 1099), then PPACA obligations change with those regulations.  But the Court cases have no direct bearing on administration as yet.  Don't be fooled into thinking you don't have to comply or stay up to speed on what is happening just because the courts are starting to weigh in on the issue.  Assume that PPACA will be with us for a while and act accordingly.  That way you won't be unprepared for the provisions that may end up sticking around.



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