e3 Financial News Archive For March / April 2012
Agencies Issue Guidance on Automatic Enrollment, Employer Mandate, and Waiting Periods
Mar 02, 2012
On the same day that they released final regulations on the Summary of Benefits and Coverage, the Departments of Labor, Health and Human Services, and Treasury (the Departments) also issued a joint set of frequently asked questions (FAQs) addressing various topics under the Affordable Care Act (ACA). IRS Notice 2012-17 (which was issued in substantially identical form by the other two Departments) provides guidance on automatic enrollment, employer shared responsibility, and waiting periods, as well as suggestions regarding various approaches the Departments are considering proposing in future regulations.
The ACA provision on automatic enrollment requires certain large employers (those with more than 200 full-time employees) to automatically enroll new full-time employees in one of the employer's health benefit plans (subject to any legally permissible waiting period), and to continue the enrollment of current employees in a health benefit plan. It further requires notice and an opt-out opportunity for employees who have been automatically enrolled.…(See attached full article to view more information on this subject)
Employer Shared Responsibility
Another key element of the ACA is the employer "shared responsibility" provision. This provision, currently scheduled to take effect in 2014, would assess a penalty against certain "applicable large employers" (those with 50 or more full-time employees) that either fail to offer "minimum essential coverage" to their full-time employees, or that offer coverage that is "unaffordable" relative to an employee's income. "Full-time" is defined to mean an employee who is employed an average of at least 30 hours per week…(See attached full article to view more information on this subject)
Under the ACA, effective for plan years beginning on or after January 1, 2014, a group health plan may not have a waiting period that exceeds 90 days. The ACA's statutory language raised many questions regarding how this 90-day limit on waiting periods should be measured. Notice 2012-17 continues to leave many of those questions unanswered, but it confirms that future regulations will incorporate the existing regulatory definition of "waiting period." …(See attached full article to view more information on this subject)
This interim guidance may be helpful to employers that are trying to project the financial effect that some of the ACA provisions will have on them in 2014 and beyond. However, because the FAQs are not binding and employers cannot rely on them, additional guidance will be necessary before employers can confirm their final strategies for compliance.
Julia M. Vander Weele, Partner
Spencer Fane Britt & Browne LLP