Agencies Release Guidance on Automatic Enrollment, Employer Shared Responsibility, and Waiting Periods
2/23/2012 11:29 AM
The Departments of Labor, Health and Human Services, and Treasury – the departments responsible for implementing certain health care reform requirements – have released guidance on several key health care reform provisions effective in 2014. The guidance – in the form of FAQs from employers and other stakeholders – covers automatic enrollment, employer shared responsibility, and the 90-day limitation on waiting periods and outlines rulemaking approaches under consideration by the departments and invites public comments.
Below find a brief overview of each health care reform provision covered by the FAQs and the key takeaways.
· Automatic Enrollment – Employers with more than 200 full-time employees and those subject to the Fair Labor Standards Act are required to automatically enroll new full-time employees in one of the employer’s health benefit plans (with adequate notice and the opportunity to opt out) and to continue the enrollment of current employees. The FAQs indicate that regulations will not be ready by 2014 and that employers need not comply until final regulations are issued and become effective.
· 90-Day Limitation on Waiting Periods – For plan years beginning on or after January 1, 2014, group health plans or insurers must not apply waiting periods exceeding 90 days. A waiting period is the period that must pass before the individual is eligible for benefits. The FAQs reiterate that this provision merely prohibits employers from requiring an otherwise eligible employee to wait more than 90 days before coverage is effective – it does not require employers to offer coverage to any particular class of employee. Additionally, the FAQs provide that other conditions for eligibility (not based solely on the lapse of a time period) under the group health plan, e.g., full-time status, receipt of a license, etc.) are generally permissible unless the condition is designed to avoid compliance with the 90-day waiting period.
· Employer Shared Responsibility – Employers with 50 or more full-time employees (working at least 30 hours per week) must offer their full-time employees the opportunity to enroll in minimal essential coverage. If the employer does not offer such coverage, the coverage is unaffordable relative to an employee’s household income, or the coverage does not provide minimum value, the employee may be certified to receive an applicable premium tax credit or cost-sharing reduction payment. In turn, the employer will be subject to a penalty per employee receiving such credit or reduction. The FAQs provide for a number of potential safe harbors, including:
o Allowing employers to use an employee’s Form W-2 wages to determine the affordability of employer coverage;
o An exception from the penalty if coverage is not offered during a waiting period, up to 90 days after the date of hire; and
o A 12-month look-back/stability period that employers could use to determine if current employees are full-time employees.
The FAQs also address intent on the part of Treasury and the IRS to issue proposed regulations that will assist employers in determining whether new hires are full-time employees for purposes of assessing penalties.
Find HHS guidance here: http://cciio.cms.gov/resources/files/Files2/02102012/employer_faq_bulletin_2_9_12_final.pdf
The Departments of Labor and Treasury have also issued guidance in substantially identical form.