Supreme Court Decides California v Texas Affordable Care Act Case- What it means to you | Maillie LLP

Supreme Court Decides California v Texas Affordable Care Act Case- What it means to you

Last week, the Supreme Court decided yet another case in a long line of legal challenges to the Affordable Care Act (ACA/Obamacare).  While the Court did not rule on the merits of California v Texas case, it found that the plaintiff in the case (Texas) lacked standing to bring the challenge to the Court.  Thus, the Affordable Care Act survives and will remain in place.

The issue in the California v. Texas case was whether the individual health insurance mandate as part of the ACA was beyond Congress’ powers to tax, given that since the individual penalty for not having health insurance was reduced to zero in 2017, and thus would no longer qualify as a tax.  If this were the case and the ACA was found to be unconstitutional, then other parts of the ACA (such as the Medicare Surtax on Wages (.009%) and the Tax on Investment Net Income (3.8%) may be struck down as well. 

Many people filed “Protective Claims” last year for 2016 and 2017 with the IRS this time last year, pending the Supreme Court’s decision in this case.  If the Supreme Court found the ACA to be unconstitutional, the opportunity for a refund of the Medicare Surtax and the Net Investment Income Tax paid in prior years may have been available.  However, the Court’s decision in California v. Texas effectively ends the hope of these Protective Claims providing any tax refund. 

Legal experts believed that this would be the outcome of the case, so we knew that any refunds to come from this case were a longshot.  However, given the small amount of paperwork required to file the Protective Claims back in 2020 we felt it was worth a shot.  There is nothing further to do for anyone that filed Protective Claims and no refunds will be forthcoming.

If you have any questions, please contact your Maillie representative via phone or email.