Health Care Reform Automatic Enrollment Requirement Repealed

Congress gave large employers an early holiday present this year in the form of the repeal of the automatic enrollment requirement of the Affordable Care Act (ACA). If it had taken effect, the provision would have required that FLSA-covered employers who employed 200 or more employees automatically enroll eligible employees in the employer-sponsored medical insurance plan. This was among the impending provisions that were most dreaded by employers because of its perceived administrative difficulty and the increased cost. The provision has been in suspense pending regulations since ACA was enacted. Due to the lack of regulations, employers were uncertain as to the mechanics of enrollment and opt-out on hire, change in employment status, and for annual open enrollment. The repeal was done without much fanfare as part of the annual budget passed by Congress on November 2, 2015.

Employers can now redirect the energy they were expending on worrying about automatic enrollment to the next big ACA milestone, the Cadillac Tax (a 40 percent excise tax on medical plans exceeding a certain value threshold). This is due to take effect in 2018, though many politicians (including several of the 2016 presidential candidates) have spoken in favor of repealing or amending it. MSEC will continue to update you on any developments with the Cadillac Tax and ACA in general.