The Affordable Care Act requires an employer with more than 200 full-time employees to automatically enroll new full-time employees in the employer's health plan. Health care reform also requires the continued enrollment of current employees in a health benefit plan offered by the employer. This so-called "Automatic Enrollment" requirement will likely be a new process for many employers when it goes into effect, which is anticipated to be some time after 2014.
While many provisions of healthcare reform are already in place or will be required by 2014, the Automatic Enrollment provisions are not yet finalized. The Department of Labor issued a Technical Release stating that its guidance on the operation of Automatic Enrollment for employers is not ready to be released. The DoL also indicated that employers would not be required to comply with automatic enrollment until after final regulations are issued and then become applicable.
Despite the government's extended respite from compliance, employers should familiarize themselves now with the meaning of automatic enrollment and prepare for administrative process that will have to be implemented when compliance is required.
Number of Employees
Employers will first have to determine if they are subject to health care reform's automatic enrollment requirements. To do this, an employer will have to calculate the number of its "full-time employees." Presently, guidance provides that full-time employees include (a) employees scheduled to work at least 30 hours per week in a typical month, plus (b) for those under 30 hours per week, the aggregate of all hours worked in a typical month divided by 120 (excluding seasonal employees who worked for less than 120 days during the prior year).
Enrolled Plan
Existing guidance does not clearly indicate the plan in which a full-time employee will have to be automatically enrolled. Guidance on this issue is expected. Employers who are implementing this health care reform requirement in advance of the required date generally enroll the employee in the health care option with the lowest employee premium. If the plan imposes a waiting period for coverage, that waiting period will still apply.
Opt-Out Required
Employers must provide an automatically enrolled employee the opportunity to opt-out of coverage or elect a different coverage option, if available.
Notice
Notice about the automatic enrollment requirement must be communicated to employees. Also, employees must receive instruction on how to opt-out of coverage if automatically enrolled.
Employer Action
Employers may wish to wait for final guidance before implementing automatic enrollment. Once automatic enrollment is established, however, employers will have to
- Amend their plans to provide for the automatic enrollment
- Communicate the change during initial enrollment
- Identify processes and procedures for implementing automatic enrollment
- Identify processes and procedures for dis-enrollment
BAS is already prepared to administer automatic enrollment provisions for group health plans. For more information, please contact Sales@BASusa.com.
