On August 12, 2011, the US Court of Appeals for the Eleventh Circuit issued an opinion in State of Florida v. US Dep't of Health & Human Services. The court held that the Affordable Care Act's (ACA's) individual mandate is:

The individual mandate requires that, after 2013, most individuals purchase and continuously maintain health insurance from private insurers or pay an annual monetary penalty.

Shortly after Congress passed the Act, 26 states, two private individuals and the National Federation of Independent Business (plaintiffs) brought an action in the US District Court for the Northern District of Florida challenging the Act’s constitutionality. The defendants include the federal Department of Health and Human Services (HHS), Treasury Department and the Department of Labor (collectively, the federal government).

The district court held, among other things, that the individual mandate was:

The federal government appealed the district court's decision to the Eleventh Circuit, which:

In assessing the individual mandate's constitutionality, the Eleventh Circuit considered whether the provision exceeded Congress’ authority under both the Commerce Clause and the Taxing and Spending Clause of the Constitution.

The court held that the individual mandate exceeded Congress' authority under the Commerce Clause, which the Supreme Court has interpreted as permitting Congress to regulate purely local, intrastate activities that substantially affect interstate commerce. The court reasoned that the individual mandate is overly broad because it forces non-market participants to enter into commerce so that Congress may regulate them. Using the example of flood insurance (which Congress has encouraged, but not required, individuals to purchase), the court stated that Congress has typically sought to encourage commercial activity it favors, and discourage what it does not, rather than impose personal mandates. The court also viewed the individual mandate as overly inclusive in that it covers both individuals who presently use health care services and those who will not need health care for many years in the future. Given the individual mandate's expansive scope, the court could see no limitations that would prevent Congress from using similar mandates to force individuals to make other economic decisions in the future.

Analyzing the individual mandate under the Taxing and Spending Clause, which permits Congress to enact and collect taxes for the common defense and welfare, the court held that the individual mandate was a penalty and could not be supported under Congress' tax power. According to the Eleventh Circuit, every court to have considered this claim has reached the same conclusion. The court noted that whereas a tax is an "enforced contribution" to provide for the government's support, a penalty is a "punishment for an unlawful act or omission." The court reasoned that the individual mandate's placement in the Internal Revenue Code (Code) under the heading for excise taxes did not convert the provision into a tax.

Reversing the district court’s other ruling, the Eleventh Circuit also held that the individual mandate is severable from the rest of the Act. To determine whether a particular provision is severable from the rest of the law, courts generally consider whether Congress would have enacted the rest of the law independent of the unconstitutional provision. A provision is presumed to be severable, and an invalid provision generally may be dropped if what is left is fully operative as a law.

The court concluded that there was insufficient evidence to overturn the presumption of severability. After analyzing the law's plain language and legislative history, the court observed that:

In addition, the court held that the law's expansion of Medicaid is constitutional.

The Sixth Circuit has previously held that the mandate is constitutional. With the Eleventh Circuit's recent decision, the federal appellate courts are now divided on the constitutionality of the Act’s individual mandate requirement. Other appellate courts, including the Fourth Circuit, are expected to rule on this issue in the near future and it is widely expected that the Supreme Court will ultimately address the individual mandate's constitutionality. For now, however, as emphasized throughout the Eleventh Circuit's decision, the Act includes an extensive number of requirements and employers must comply with these provisions, which include: