Budget Legislation Repeals Affordable Care Act’s Automatic Enrollment Requirement for Large EmployersNov 05, 2015
The Bipartisan Budget Act of 2015, Pub. L. No. 114-74, which was signed by President Obama on November 2, 2015, included a little‑publicized provision that repealed the Affordable Care Act’s automatic enrollment requirement. The provision that was repealed had amended the Fair Labor Standards Act to require certain large employers to “automatically enroll” new full–time employees in one of the employer’s health benefit plans (subject to any waiting period authorized by law).1 The law had not yet taken effect, however, because the Secretary of Labor had never promulgated the regulations required to implement the automatic enrollment requirement.2
In 2012, the Department of Labor issued guidance acknowledging the challenge of implementing the automatic enrollment requirement, stating that it was “aware of the need to coordinate the work it will be undertaking to develop guidance relating to automatic enrollment with the guidance being developed regarding other related Affordable Care Act provisions, including the employer shared responsibility provision and the 90-day limitation on waiting periods.”3 The requirement had also been criticized by trade associations and large employers as being ambiguous and duplicative of requirements imposed by the Affordable Care Act, specifically, the shared responsibility and individual mandates, and as potentially forcing employees into coverage that they may not want, as well as creating new administrative burdens.4
We will continue to report on other major developments relating to the Affordable Care Act in subsequent Clients & Friends memoranda.
1 Specifically, the budget legislation repealed Section 18A of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq. (the “FLSA”), which was added by Section 1511 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, which imposed the automatic enrollment requirement on employers that are subject to the FLSA and that have more than 200 full-time employees.
2 See U.S. Department of Labor, FAQs about Affordable Care Act Implementation Part V and Mental Health Parity Implementation (Dec. 22, 2010), available at http://www.dol.gov/ebsa/faqs/faq-aca5.html (“Section 18A provides that employer compliance with the automatic enrollment provisions of that section shall be carried out ‘[i]n accordance with regulations promulgated by the Secretary [of Labor].’ Accordingly, it is the view of the Department of Labor that, until such regulations are issued, employers are not required to comply with section 18A.”)
3 U.S. Department of Labor, Technical Release No. 2012-01: Frequently Asked Questions from Employers regarding Automatic Enrollment, Employer Shared Responsibility, and Waiting Periods (Feb. 9, 2012), available at http://www.dol.gov/ebsa/newsroom/tr12-01.html. Substantially identical guidance was issued by the U.S. Departments of Health and Human Services and the Treasury. See U.S. Department of Health and Human Services, Center for Consumer Information and Insurance Oversight, Centers for Medicare & Medicaid Services, Frequently Asked Questions from Employers regarding Automatic Enrollment, Employer Shared Responsibility, and Waiting Periods (Feb. 9, 2012), available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/employer_faq_bulletin_2_9_12_final.pdf and U.S. Department of the Treasury, Internal Revenue Service (“IRS”), IRS Notice 2012-17, Frequently Asked Questions from Employers regarding Automatic Enrollment, Employer Shared Responsibility, and Waiting Periods (Feb. 9, 2012), available at https://www.irs.gov/pub/irs-drop/n-12-17.pdf.
4 July 22, 2014, letter to Senator Johnny Isakson (R-GA) signed by 170 trade groups and businesses supporting Isakson’s bill to repeal the automatic enrollment requirement, available at http://rila.informz.net/RILA/data/images/