Many provisions of the Affordable Care Act were to become effective beginning in 2014. Among these are provisions for automatic enrollment of full-time employees in an employer’s group health plan.
This means that if you are an employer with more than 200 full-time employees, you will be required to automatically enroll all of your full-time employees in your health insurance plan.
The automatic enrollment program will be used to enroll new full-time employees in one of the employer’s group health benefit plans (subject to any waiting period authorized by law) and to continue the enrollment of current employees in a health benefit plan offered through the employer. The employer must provide adequate notice of the enrollment program and provide the opportunity for an employee to opt out of any coverage in which the employee was automatically enrolled. Pending further guidance to be issued by the Department of Labor, the Act intends for all employees, current and new, to be enrolled in a health plan unless they formally opt out.
The Department of Labor has taken the position that employers are not required to comply with the automatic enrollment mandate until it issues further implementation regulations.
The Department of Labor has concluded that its guidance will not be ready to take effect by 2014, and implementation of the automatic enrollment requirements has been delayed.
90-Day Limitation on Waiting Periods
90-Day Limitation on Waiting Periods – In plan years beginning on or after January 1, 2014, a group health plan may not apply any waiting period that exceeds 90 days. The Act does not distinguish between full-time and part-time employees. This provision will go into effect as planned and we will follow up with more information regarding the details as provided in more recent IRS guidance.
What Actions Should Applicable Employers Be Prepared to Take?
Employers that do not currently have an automatic enrollment program for their group health plans may be required to implement one when the Department of Labor issues guidance, and those that do have a program may have to modify it to conform to the guidance.
- Employers will need to be prepared for the administrative challenges of managing the enrollment program, such as employees wanting to opt out of coverage after being enrolled.
- Employees must comply with the mandatory disclosure requirements.
- Employers will need to develop a communications strategy to ensure new and continuing employees are aware of the automatic enrollment program and how it works.
There remains some uncertainty in the specifics of the mandatory automatic enrollment, thus, employers should wait until the Department of Labor issues guidance before implementing a new automatic enrollment program or modifying an existing one. However, it is not too soon to be considering the new mandate, so that you are ready to act when the guidance is issued.
Please contact your Warren Averett advisor for assistance in preparing for compliance under the mandatory automatic enrollment provisions.