Additional guidance provided on employers' requirements for shared responsibility fee, automatic enrollment and waiting periods
March 22, 2012
The Internal Revenue Service and the Department of Labor have issued additional guidance on three administrative requirements that employers will have to comply with under the Affordable Care Act. These requirements are designed to expand employees' access to employer sponsored health coverage beginning in 2014.
The guidance provides clarification on the employer shared responsibility fee, automatic enrollment and the 90-day limit on waiting period requirements.
Below are some common questions to help better understand this announcement:
Employer shared responsibility
What are the general requirements for employer shared responsibility?
As part of the employer mandate, any employer with 50 or more full-time equivalent employees will have to pay a fee to the Internal Revenue Service if any full-time employee receives a premium tax credit or cost-sharing reduction payment via an individual market Exchange.
A full-time employee can receive this premium tax credit or cost-sharing reduction payment if:
- the employer does not offer its full-time employees and their dependents the opportunity to enroll in coverage under an employer-sponsored health plan, or
- the employer offers the opportunity for full-time employees and their dependents to enroll in an eligible employer-sponsored health plan, but the plan is either unaffordable or does not provide the federally required minimum value of coverage.
What does the additional guidance clarify about the employer shared responsibility requirement?
In calculating the affordability of an employer-sponsored health plan, the employee's wages reported on a W-2 tax form can be used to calculate this affordability.
The federal government also plans to propose regulations to clarify the employer shared responsibility fee and the definition of a full-time employee. For more details on the agency's intentions for proposed regulations, go to the Department of Labor's website or HealthCare.gov.
What are the general requirements of automatic enrollment?
Automatic enrollment requires certain employers to automatically enroll its new employees in one of its employer-sponsored health plans, and these employers should continue enrolling current employees. Employers' automatic enrollment processes should include providing their employees with adequate notice and opportunity to decide not to enroll in the designated health plan.
What size employer has to meet the requirements for automatic enrollment?
An employer with more than 200 full-time employees that also offers enrollment in one or more health benefits plans will have to meet the requirements for automatic enrollment.
What does the additional guidance clarify about the automatic enrollment requirement?
The Department of Labor has decided the regulations for automatic enrollment will not be ready by 2014, so there is no clear effective date at this time. Employers will not be expected to meet these requirements until regulations are provided. The effective date will be no earlier than 2015.
90-day limit on waiting periods
What are the general requirements for the 90-day limitation on waiting periods?
For plan years beginning on or after Jan. 1, 2014, a group health plan or group health insurance issuer cannot apply any waiting period that exceeds 90 days for employees eligible to participate in the group health plan.
What does the additional guidance clarify about the 90-day limitation on waiting periods for group health plans?
The restriction on waiting periods does not imply that employers have to offer coverage to all types of employees. Please note the following examples:
- Employers will still be allowed to offer coverage to full-time employees but not to part-time employees. If an employee went from part-time to full-time, the 90-day period would begin when the employee becomes eligible for coverage.
- For example, a part-time employee hired on Jan. 1, may be determined to be ineligible for coverage. Once that employee transitioned to full-time beginning March 1, the waiting period for this newly hired full-time employee's benefits cannot exceed the date of June 1 (90 days after being newly hired).
Where can I get more information on employer shared responsibility, automatic enrollment, and the 90-day limitation on waiting periods?
The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.