This decision makes it easier for suits alleging breach of fiduciary duties due to imprudent investments or excessive fees to avoid a defendant’s motion to dismiss.

On January 24, the U.S. Supreme Court reversed the dismissal of a suit brought by retirement plan participants against Northwestern University for breach of the ERISA fiduciary duty of prudence.  The participants sued alleging the institution allowed its retirement plans to pay excessive investment and recordkeeping fees on some investments included in the menu for participant-directed accounts such as retail share class mutual funds.  They also alleged that by having too large of a menu (over 400 choices), participants were confused as to which to choose.

The high Court rejected the reasoning of the lower courts that the availability of other lower cost investments in the menu meant the participants had no cause of action.  In a relatively short opinion, that wasn’t expected until later in the year (see, “Happy New Year! Supreme Court Expected To Be Busy With ERISA Again In 2022“), the Court relied on its 2015 decision in Tibble holding the fiduciary duty of prudence includes the duty to continually monitor investments and participants may allege a fiduciary has breached its duty by failing to remove investments that have become imprudent.   The Court reasoned that the allegations in the Northwestern case are similar to that in Tibble as the participants allege that by continuing to include imprudent investments with excessive fees, they have failed to monitor and remove imprudent investments.

The Justices found that the lower courts erred in not applying Tibble.   Instead they focused on a different aspect of the duty of prudence, to provide an adequate array of choices.  The lower courts found that because lower-cost prudent investments were available for participants to choose from, they could not complain they were forced to choose the imprudent investments.  The Justices held, the lower courts should have applied Tibble and not dismissed the case.   Therefore, it overturned the dismissal and sent the case back to the United States Court of Appeals for the Seventh Circuit with instructions to apply Tibble to determine whether the participants have stated a claim and that such inquiry should be context specific based on the circumstances.

This decision means that it will be easier for suits alleging breach of fiduciary duties due to imprudent investments or excessive fees to avoid a defendant’s motion to dismiss.   It also means, the wave of excessive fee litigation will continue.  Many cases were suspended, awaiting the high Court’s decision.  Plan fiduciaries charged with establishing the investments for the plan should be reviewing their investment menus with respect to fees to be prudent, now and routinely in the future.

The United States Supreme Court is considering whether to hear an appeal from United States Court of Appeals for the Ninth Circuit, dismissing a case brought by the Howard Jarvis Taxpayers Association claiming that CalSavers, California’s mandated payroll deduction IRA program, is preempted by ERISA (See Happy New Year! Supreme Court Expected To Be Busy With ERISA Again In 2022).  In the meantime, the CalSavers program continues as state law.  On Janurary 12,  the CalSavers Retirement Savings Board issued a press release stating that it will begin levying penalties, this month, on those employers failing to register with CalSavers by their deadline of September 30, 2020.  Employers with more than 100 employees not offering a retirement program to their employees were required to register by that date.  The original deadline was June 30, 2020 but it was extended due to the Coronavirus.  The penalty is $250 per employee (meaning the minimum would be $25,250 for 101 employees) and will be levied in partnership with the California Franchise Tax Board.  Once receiving the first notice of penalties, if the employer doesn’t comply within 90 days the penalty increases another $500 (for at total of $750, or $75,750 minimum) per employee.  The release says that the program has sent dozens of notifications by letter and email since it launched three years ago.  It urges employers to comply now before receiving the notice of penalties and states service representatives are standing by to assist employers.

Threshold Drops.  Importantly, the threshold number of employees, requiring employers to register with CalSavers if not offering a retirement plan, dropped from over 100 to over 50 with a deadline to register of June 30, 2021.  Additionally, employers with 5 or more employees and no plan must register by June 30, 2022 to avoid penalties.

Registering involves employers providing CalSavers with contact information for their employees so that CalSavers can contact them about enrolling.  Unless the employee opts out or changes the contribution amount, employers must withhold 5% of pay from all enrolled employees and pay it over to CalSavers.  The CalSavers program then invests the contributions in Roth IRAs for each employee.  The employee can opt out of a Roth IRA for a traditional IRA.

Consider Options.  Because CalSavers is IRA based, the amount that can be saved by employees is much lower than in a private qualified plan such as a 401(k) plan (See Inflation Adjusted Plan Limits Reiterate Advantages of Employer Plan Over CalSAVERS.  Employers with more than 5 employees that don’t currently provide a retirement plan should consult with an employee benefits attorney or other  professional to compare adopting a private plan over registering for CalSavers.  Please contact us with questions and look for our upcoming seminar/webinar on the subject.

Calendar year 2020 saw four U.S. Supreme Court decisions dealing with ERISA and employee benefits, three from the term beginning October 2019 and one from the 2020 term.  Another case from the 2020 term, California v. Texas was decided in 2021 (See, Supremes Uphold ACA Again! Find Challengers Lacked Standing).  2022 promises to provide a number of ERISA decisions as well, as the high Court continues to show interest in hearing ERISA issues.  Set forth below are some cases that may be decided during the current term.

1.  Hughes v. Northwestern University.   Oral arguments were heard by the Court in this case on December 6, 2021.  At issue is the standard a plaintiff, suing for breach of the ERISA fiduciary duty of prudence, must plead to adequately state a cause of action.  In a class action, the participants claimed the university’s 403(b) plan fiduciaries breached their duty by paying excessive record keeping and investment fees when lower fees were available.  The District Court dismissed the case and the United States Court of Appeals for the Seventh Circuit upheld the decision.  This caused a split with the Third Circuit’s 2019 decision in Sweda v. University of Pennsylvania.  A decision is expected in the Summer.

2.  John Doe 1 v. Express Scripts.  The issue in this case is whether Anthem, Inc., a health plan provider, (Anthem) and Express Scripts, Inc., a pharmacy benefits manager, (Express) breached fiduciary duties under ERISA when they negotiated that Anthem participants would pay higher prices for prescriptions under the pharmacy benefits manager agreement between the two companies, in exchange for a lower purchase price for Express to buy three Pharmacy Benefit Management companies from Anthem. The Second Circuit held neither company was an ERISA fiduciary when negotiating their business deal.  The employer health plans using Anthem petitioned the Supreme Court to hear the case.  The high Court has not yet decided whether to hear the case but on December 13, the justices invited the U. S. Solicitor General to file a brief giving the federal government’s view on the issue.  This is a sign of high interest in the case.

3.  Jarvis v. CalSavers.  As previously reported, the Howard Jarvis Taxpayers Association is continuing its challenge to CalSavers, by asking the Supreme Court to overturn the decision of the United States Court of Appeals for the Ninth Circuit, dismissing its preemption challenge, and the justices have requested CalSavers to respond. (See Inflation Adjusted Plan Limits Reiterate Advantages of Employer Plan Over CalSAVERS; Supremes May Accept Preemption Challenge).  Again the request by the justices that the state agency respond indicates their interest in the case.  Originally, the response was due on December 2, 2021, but it has now been extended to January 21, 2022.  In requesting the extension, the California  Attorney General’s Office stated it has learned that a petition for the Court to hear another case involving preemption is likely to be filed on January 14.  That case is ERISA Industry Committee v. Seattle, in which the Ninth Circuit upheld a Seattle ordinance against ERISA preemption.  The Seattle law requires large hotels and related businesses to provide workers with either health insurance coverage or additional compensation.  The California Attorney General asked for further time to respond in the CalSavers case to address any overlapping issues in both cases.

Stay tuned throughout 2022 to see if the Court has another term with multiple ERISA decisions.

The IRS announced the inflation adjusted qualified plan and IRA contribution limits for 2022 in Notice 2021-61 on November 4, 2021.  The new numbers include significant increases. However, importantly the limit on contributions to IRAs remain the same at $6,000, with an additional $1,000 if 50 or older.  On the other hand, the limit for elective deferrals for 401(k) plans have increased from $19,500 to $20,500, though the catch-up limit remains $6,500.  Additionally, the amount of compensation that can be considered under a defined contribution plan has increased by $15,000 from $290,000 to $305,000.  Likewise, the 415 limit on the total annual amount that can be contributed to a defined contribution plan has increased from $58,000 to $61,000.

CalSavers is California’s mandated payroll deduction IRA program that I have written about many times (See CalSavers Saved From ERISA Preemption By District Court CalSavers Not Preempted By ERISA! ).  California law requires employers of a certain size that do not offer a retirement plan to withhold 5% of compensation of employees and pay it over to CalSavers who invests it into Roth-IRAs for the employee, unless the employee opts out.  Next year, CalSavers applies to all employers with 5 or more employees.  Because the CalSavers program (as well as similar programs in other states) utilizes IRAs, employees simply can’t save as much as they could through an employer sponsored program.  For example, in 2022 an employee over age 50 can contribute $27,000 in salary reduction elective deferrals into a 401(k) plan.  Meanwhile, the same employee could only contribute $7,000 into a Roth-IRA under CalSavers.   That is a significant difference of $20,000.  These numbers reiterate how from a retirement savings standpoint, an employer sponsored plan is more advantageous than CalSavers.

The Howard Jarvis Taxpayers Association (HJTA) has challenged CalSavers from its enactment, maintaining that it was preempted by ERISA.  In May, the Ninth Circuit Court of Appeals upheld the lower court’s dismissal of the complaint.  See Ninth Circuit Holds CalSavers Is Not Preempted By ERISA. . . 6/30 Deadline Approaching.  HJTA filed a petition of certiorari with the U.S. Supreme Court requesting that they hear its appeal on October 12, 2021.  CalSavers filed a waiver of its right to respond on October 18.  However, on November 2, the Court requested that state Treasurer Fiona Ma file a response on behalf of CalSavers.  While the high Court has not yet decided whether it will hear HJTA’s appeal, this action certainly indicates it is leaning that way.  Should the Court hold that CalSavers is preempted by ERISA, the fact that employer sponsored plans allow for greater retirement savings won’t matter as CalSavers won’t be an option any longer.  However, this could have a chilling effect on employer’s adopting new plans as they would no longer have the incentive to avoid CalSavers.

 

The provision mandating that employers not otherwise offering a retirement plan to employees must offer an elective deferral only 401(k) plan or payroll deduction IRA for employees to save for retirement (See “Could CalSavers Go National? Federal Mandated Payroll Deduction Plan Proposal Included In 3.5 Trillion Budget Proposal“) has been dropped from President Biden’s latest $1.75 billion pared-down version of the bill.   The proposal had passed the House Ways & Means Committee on September 9 as part of the $3.5 trillion Budget Reconciliation proposal.  Also dropped was the proposal to restrict  so-called Mega IRAs (See “Ways & Means Committee Says You Must Save For Retirement, But Not Too Much“) as well as the paid family and medical leave provisions.  The original bill was reduced to appease Democratic opposition and President Biden believes that the compromise will have the support of all 50 Democratic Senators as well as pass the House of Representatives.  However, we’ll have to see.

 

In March of this year I wrote two blog articles on how the new Biden administration would not enforce and was likely going to change the Trump administration’s Department of Labor final rule on environmental, social, and govenrnance (ESG) investing in ERISA plans that became effective January 12, 2021.  See “New President, New Hope, New ESG Policy. . . Maybe” and “DOL Won’t Enforce Trump Administration’s New ESG Rules.”  On October 13, the Biden administration’s Department of Labor issued proposed regulations that would significantly change the Trump final rule with respect to ESG investments.  President Biden had issued several Executive Orders directing agencies to review regulations that may be inconsistent with the goals of improving public health, protecting the environment, and bolstering resilience to the impacts of climate change.  In May, an Executive Order directed the DOL to review the final ESG rules in light of climate-related financial risk that may threaten retirement savings.

The proposed regulations would add language clarifying that the consideration of climate change and other ESG factors  on the investment may be required to meet the fiduciary duty of prudence.  The proposed rules eliminate the prohibition of an ESG investment from being a QDIA investment under the Trump rule, instead providing the same standards apply to QDIA’s as any other investment.  The proposed rule also re-works the “tie-breaker” rules when comparing investment alternatives.  Under the Trump rule the fiduciary must determine that the two alternatives are economically indistinguishable using only pecuniary factors before considering any non-pecuniary factor such as ESG factors.  Additionally, the fiduciary must document how it arrived at the decision.  Under the proposed rule, the standard would be that the fiduciary conclude prudently that competing investments  equally serve the financial interests of the plan over the appropriate time horizon.  If so, the fiduciary is not prohibited  from selecting the investment based on economic or non-economic benefits other than investment returns.

Finally, the proposed regulations would make significant changes to the shareholder rights and proxy voting provisions of the Trump rule which were thought to chill proxy voting on ESG investments.  These changes include removing the statement in the current regulations that a fiduciary is not under a duty to vote every proxy or exercise every shareholder right.  It also would remove two safe harbor examples limiting proxy voting.  It also removes documentation requirements when exercising shareholder rights.

It’s important to note that these are only proposed changes to the current regulations.  The Department of Labor is accepting public comments on the proposed rules for 60 days.

My last blog article discussed how the $3.5 trillion budget proposal contains a provision requiring employers with 5 or more employees to offer a payroll deduction IRA program or salary reduction 401(k) plan to employees and automatically deduct 6% of their pay and contribute it to such plan or face penalties, effective January 1, 2023.  See Could CalSavers Go National? Federal Mandated Payroll Deduction Plan Proposal Included In 3.5 Trillion Budget Proposal.  That proposal passed the House Ways & Means Committee on September 9, 2021.  The reasoning for the provision was that not enough Americans have saved enough for retirement.  According to a 2019 U.S. Government Accountability Office report, nearly half of people aged 55 or older have nothing saved for when they stop working.

On September 15, the Committee approved provisions limiting how much those who do save for retirement can save as revenue raising provisions for the budget proposal.  These include:

  • Contributions Limit.  Prohibiting further contributions for individual retirement plans (IRAs) or Roth IRAs for individuals who earn too much income and with combined account balances in excess of $10 million in IRA and Defined Contribution (DC) plans.  The income thresholds are for: single filing taxpayers, or married taxpayers filing separately, taxable income over $400,000; married taxpayers filing jointly, taxable income over $450,000; and heads of household filers, taxable income over $425,000.
  • Minimum Distribution.  Requiring a minimum distribution of 50% of the amount by which an individual’s prior year combined traditional IRA, Roth IRA and DC plan account balances exceed $10 million.
  • Back-Door Conversion.  Eliminating Roth conversions for both IRAs and employer-sponsored plans for: single filing taxpayers, or married taxpayers filing separately, with taxable income over $400,000; married taxpayers filing jointly with taxable income over $450,000; and heads of household filers with taxable income over $425,000.
  • Investment Prohibitions.  Prohibiting an IRA from holding any security if the issuer of the security requires the IRA owner to have certain minimum level of assets or income, or have completed a minimum level of education or obtained a specific license or credential.  Another provision prohibits investment of IRA assets in entities in which the owner has a substantial interest.  This would eliminate the attractiveness of many self-directed IRAs.
  • Prohibited Transactions.  Clarifying that IRA owners (even owners of inherited IRAs) are disqualified persons for purposes of the prohibited transactions rules.

The Joint Committee on Taxation estimates that these tax changes would raise approximately $2.1 trillion over 10 years to help pay for the budget reconciliation bill.  The provision eliminating the Back-Door Conversion would not be effective until 2032 but the remaining provisions would be effective next year.  These provisions will now go to the House Budget Committee and added to other proposals as part of the reconciliation process, and those approved would move to the full House of Representatives.

Again, this is still proposed legislation and it is not clear whether these provisions will become law.  Together, these provisions and the mandated plan provision clearly are an attempt to close the gap in retirement savings between the classes.

In May the United States Court of Appeals for the Ninth Circuit ruled that California’s automatic enrollment IRA program known as CalSavers was not preempted by the federal law, ERISA.  See, Ninth Circuit Holds CalSavers Is Not Preempted By ERISA. . . 6/30 Deadline Approaching.  CalSavers mandates that California employers of a certain size must automatically deduct 5% of an employee’s pay and contribute it to CalSavers unless the employer maintains a retirement plan.  Failure to do so results in penalties to the employer.  The automatic contribution automatically escalates 1% per year up to 8% unless the employee opts out of the escalation.  CalSavers invests the contributions in Roth IRAs for the employee unless the employee opts out of the program or elects a traditional IRA.  The reason for the law was that not enough California employers offer retirement plans.  Currently, employers with 50 or more employees without a retirement plan must register with CalSavers.  That threshold goes down to 5 employees next June.

Contained in the Biden 3.5 trillion dollar budget proposal is a provision to enact a similar federal mandated program to be effective in 2023.  The House Ways & Means Committee approved the proposal on September 9.  It now goes to the Budget Committee to see if it will make the final version that goes to the House floor.  The provision requires employers with 5 or more employees that do not offer a retirement plan to pay a penalty of $10/day per employee.  Employers would have to deduct 6% of the employee’s pay unless the employee opts out.  The contribution escalates 1% per year until it reaches 10%.

A key difference in the federal proposal is that unlike CalSavers that is run by the state of California with limited employer involvement, the proposal requires the employer to adopt a plan which could be a deferral only 401(k) plan or an IRA based plan.  State mandated programs like CalSavers would also qualify.

The major reason for the proposal is that Americans are simply not saving enough for retirement.  Nearly half of people aged 55 or older have nothing saved for when they stop working, according to a 2019 U.S. Government Accountability Office report.  Of course, the fate of the budget proposal is uncertain with the politics on Capitol Hill.  Stay tuned for further developments.

 

On July 16, 2021, the IRS released its updated Employee Plans Compliance Resolution System (EPCRS) by issuing Rev. Proc. 2021-30 setting forth the parameters of the program and replacing the former governing revenue procedure, Rev. Proc.  2019-19.  EPCRS is a comprehensive system under which employers can save the favorable tax treatment of retirement plans intended to be qualified retirement plans under Internal Revenue Code (Code) section 401(a), 403(b) plans, or SEP and SIMPLE IRAs when they have failed to meet the requirements of the Code either in operation or in their plan document.  Changes to EPCRS include: expansion of the Self-Correction Program (SCP); the elimination of anonymous Voluntary Correction Program (VCP) submissions, but creation of free anonymous pre-submission VCP conferences; as well as other changes.

EPCRS establishes three distinct programs for correcting operational and documentary failures of retirement plans, allowing a plan to be corrected and maintain tax-favored status under the Code despite an otherwise disqualifying error.  These programs are the SCP, the VCP, and Audit-CAP.   SCP allows employers to voluntarily self-correct certain failures without having to file with the IRS and obtaining its consent.  The VCP allows employers, whose plans are not under examination by the IRS, to voluntarily bring errors in plan documentation or operation to the attention of the IRS, pay a user fee based on the plan’s assets, propose a correction method, and receive a compliance statement from the IRS stating if the corrections are made within 150 days of the date of the statement, the IRS will not disqualify the plan because of the error.  The Audit-CAP program allows the employer whose plan has been audited by the IRS and found to include a disqualifying failure to pay a sanction amount, correct the failure, and keep the plan qualified for participant employees.

Expansion of SCP.  Under prior versions of EPCRS, insignificant operational failures could be self-corrected at any time while significant failures could only be self-corrected if the correction was completed by the end of the second plan year after the plan year in which the failure first occurred.  Rev. Proc. 2021-30 provides, effective July 16, 2021, the period for self-correcting significant operational failures is extended to the end of the third plan year after the plan year in which the failure occurred.  This is a welcomed change as it give employers longer to discover and self-correct any such failures without having to submit to the VCP and pay a user fee.  Additionally, EPCRS now makes it easier to self-correct operational failures through retroactive plan amendments effective July 16, 2021, by eliminating a confusing and difficult requirement that all participants in the plan (not just those affected by the failure) benefit from the retroactive amendment.

While these changes to the SCP are welcomed, notably there was no change to how one determines whether an operational failure is significant.  The new EPCRS still lists the 7 factors to consider and only provides examples of how to apply them.  This means that in close cases a VCP submission is the only way to ensure the IRS won’t challenge the correction.

Anonymous VCP Submissions.  Under Rev. Proc. 2021-30, effective January 1, 2022, the ability to file an anonymous VCP submission is eliminated.  Currently, employers’ representatives can file under VCP without disclosing their identity until the IRS agrees the failures can be corrected under VCP.  This was very useful when the nature of the failures were such that it was unclear if they qualified or whether the employer’s proposed correction was acceptable.  Encouraging though is the creation of the anonymous pre-submission conference beginning next January.  Under this procedure, employers’ representatives can request a conference with the IRS to discuss a potential VCP submission without disclosing the identity of the employer or paying a user fee.  Failures for which there are safe harbor corrections described in EPCRS are not eligible.  The conferences are at the discretion of the IRS and, if granted, the IRS will provide advisory oral feedback that is not binding.  After the conference, if the employer wishes to file a VCP submission, it cannot be anonymous and the user fee must be paid.

Employers currently considering anonymous VCP submissions should consider whether they want to file before January 1, 2022, or file for a pre-submission conference in 2022, or just forgo filing anonymously.

Other Changes. Rev. Proc. 2021-30 contains other changes as well.  Effective July 16, 2021, it expands to defined benefit plans correction principles previously applicable only to defined contribution plans regarding overpayments to participants or beneficiaries.  Defined benefit plans may now be corrected without requiring the recipient to re-pay the plan by reducing future payments.  Under certain circumstances, the employer need not re-pay the plan either.

Rev. Proc. 2021-30 also extends a safe harbor correction method for missed elective deferrals for automatic enrollment contributions in a 401(k) or 403(b) plan.  The safe harbor provides that no QNEC is required for the missed deferral, provided correct deferrals begin within a certain time.  Matching contributions that would have been made had the missed deferrals been made must still be made, with earnings. The safe harbor sunset as of December 31, 2020 but is now extended through December 31, 2023.

Rev. Proc. 2021-30 also increases the dollar amount considered de minimis and not requiring correction for certain overpayments to a participant or excess amounts contributed on behalf of a participant from $100 to $250.  This change is effective July 16, 2021.

Conclusion.  EPCRS is a very beneficial program for keeping the favorable tax treatment of retirement plans when the plan has experienced a failure to comply with the Code.  The IRS continues to try to improve the program every couple of years with a new revenue procedure.  Employers who are aware of disqualifying failures in their plan should consult with legal counsel to see what Rev. Proc. 2021-30 means for their plans.

On June 17, the U.S. Supreme Court finally decided California v. Texas, the case challenging the constitutionality of the Affordable Care Act (ACA) after the penalty for not complying with the individual health insurance mandate was reduced to zero in the 2017 Tax Act.  Many believed the case would center around whether the rest of the ACA could be severed from the individual mandate if the Court found the mandate unconstitutional.  See, Could Severalbility Be The Treat That Foils Senate Republican’s ACA Supreme Court Trick? However, the Justices did not even reach that issue because they found in a 7-2 decision that the challengers lacked standing to bring the lawsuit in the first place.

The challengers’ (two individuals, Texas, and 17 other Republican states) argument was fairly straight forward.  In 2012 the Supreme Court upheld the constitutionality of the individual mandate under the taxing power of Congress.  In the 2017 Tax Act, Congress reduced the penalty for not complying with the individual mandate to zero.  Therefore, there was no longer a tax and the individual mandate is now unconstitutional.  A Texas District Court agreed in 2018 and also held the individual mandate was so integral to the ACA that the entire Act was also unconstitutional.  On appeal, the United States Court of Appeals for the Fifth Circuit agreed on the individual mandate but ordered the lower court to revisit whether any of the rest of the ACA could be saved.

California, the U.S. House of Representatives, and other Democratic states asked the high court to overturn the lower courts and again uphold the individual mandate.  Alternatively, they argued that if the mandate were unconstitutional, the rest of the ACA was severable and should be upheld.  Finally, they argued that neither the individuals nor the state challengers were injured enough by the ACA to have standing to bring the suit challenging it.

Writing for the majority, Justice Breyer said that the two individuals challenging the law lacked standing because their past and future insurance payments necessary to meet the individual mandate was not fairly traceable to any allegedly unlawful conduct of which they complained.  Since there is no penalty for not complying with the mandate, it is unenforceable and the individuals have not shown any government action or conduct has caused or will cause the injury they attribute to the mandate.  Unenforceable statutory language alone is not sufficient to establish standing and standing requires identification of a remedy to redress the plaintiff’s injuries.  The only remedy requested was declaratory judgment that an unenforceable provision is unconstitutional which would amount to an advisory opinion.

Texas and the other states also failed to show the injuries they allege are traceable to the government’s alleged unlawful conduct.  Breyer rejected, the alleged indirect injury of increased cost to run state-operated medical insurance programs that provide the mandated minimum essential coverage and increase in enrollment in such programs due to the mandate.  He stated that without a penalty, the states failed to show how the mandate leads more individuals to enroll, “Neither logic nor intuition suggests that the presence of the minimum essential coverage requirement would lead and individual to enroll in one of those programs that its absence would lead them to ignore. . . without a penalty what incentive could the provision provide?”

Breyer further rejected the states’ argument they suffered direct injury from increased administrative and related expenses required by the mandate’s minimum essential coverage requirements, finding that it was other provisions of the ACA that impose those requirements not the individual mandate.  Further, those provisions are enforced without reference to the mandate.  Holding the mandate unconstitutional would not show that enforcement of these provisions was unconstitutional.  Therefore, the government’s conduct in question is not fairly traceable to the allegedly unlawful provision.

Justice Alito was joined by Justice Gorsuch in dissenting.  Interestingly, Justice Barrett, whose appointment to the high court was thought by many to doom the ACA,  joined the majority opinion.

The decision on procedural grounds means that the merits as to whether the individual mandate is constitutional was not reached.  This leaves open the possibility of it being challenged again, if a plaintiff with actual injury, and thus standing can be found by opponents of the ACA.  Of course, should the issue wind up at the Supreme Court again, it could still save the rest of the ACA by holding the unconstitutional mandate is severable.