Employer Requirements Under PPACA: Automatic Enrollment Issues

May 31, 2011 (PLANSPONSOR.com) - PPACA included a new requirement that employers automatically enroll full-time employees for coverage and give them the opportunity to opt out. 

 

By PS

As employers are moving to the next stage of health care reform, they are asking more questions about this new rule.

What is the automatic enrollment requirement?

PPACA requires employers with more than 200 full-time employees that offer one or more health benefit plan options to automatically enroll new full-time employees in one of these plans (subject to any legally permissible waiting periods).  The provision also requires employers to continue the enrollment of current employees.  The employer must give “adequate notice” to employees of their automatic enrollment and the opportunity to opt out of coverage.

When does the automatic enrollment requirement apply?

The statute says that employers must offer automatic enrollment “in accordance with regulations promulgated by the Secretary [of Labor].”  The Department of Labor has issued a Q&A that clarifies that the automatic enrollment provision is not effective until the Secretary has issued regulations and that the Secretary has delegated this responsibility to the Employee Benefits Security Administration (EBSA) within the Department of Labor. 

The Q&A goes on to say that, “until such regulations are issued, employers are not required to comply with [automatic enrollment].”  The Q&A says that the Department “expects to work with stakeholders to ensure that it has the necessary information and data it needs to develop regulations in this area that take into account the practices employers currently use for auto-enrollment and to solicit the views and practices of a broad range of stakeholders, including employers, workers, and their families.”  The Department does not estimate a date for regulations, other than to say it intends to issue rules by 2014. 

 

Who will be considered a full-time employee?

The PPACA statute does not answer that question, so we also are waiting for regulations to define "full-time employee."  The Department of Labor's Q&As did say that it would coordinate with the Department of Treasury, since the definition of "full-time employee" also is important to the employer "pay or play" requirements that are governed by Treasury.  In addition, Treasury has issued a Notice and request for comment on the definition of "full-time employee" (Notice 2011-36) and noted that it is coordinating with the Department of Labor.  Comments are due on the Treasury Notice by June 17, 2011.

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Got a health-care reform question?  You can ask YOUR health-care reform legislation question online at http://www.surveymonkey.com/s/second_opinions

You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html  

Contributors:

Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare.  She represents employers designing health plans as well as insurers designing new products.  Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.

Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.

PLEASE NOTE:  This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

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