Bipartisan Budget Act of 2015 Repeals ACA Automatic Enrollment Provision
Author: Timothy G. Verrall (Houston)
Published Date: November 24, 2015
Despite a marked lack of success for efforts in Congress and through the courts to repeal the Patient Protection and Affordable Care Act of 2010 (ACA) completely, or substantially interrupt its implementation, the Bipartisan Budget Act of 2015 (H.R. 1314) has quietly repealed the ACA’s potentially problematic automatic enrollment requirement for health plans. As originally enacted and set forth in ACA Section 1511, the automatic enrollment requirement was incorporated into the Fair Labor Standards Act (FLSA) and obligated employers subject to the FLSA with 200 or more employees to amend their group health plans to automatically enroll new full-time employees and to continue enrollment for current employees. The intended effective date for this requirement was not specified in the ACA, and the U.S. Department of Labor deferred its application pending issuance of clarifying regulations.
Since the ACA’s enactment, commentators have noted various practical issues with the automatic enrollment requirement, ranging from difficulties in securing employee authorizations for payroll deductions to cover premium costs, to administrative issues for Section 125 cafeteria plans, to concerns about dealing with employees who are inadvertently enrolled in coverage they didn’t want or could not afford. Perhaps most importantly, the ACA’s employer mandate already effectively requires employers with 50 or more full-time equivalent employees to offer health coverage to full-time employees. When coupled with the ACA’s individual mandate requiring individuals to purchase and maintain their own health coverage, the twin mandates significantly undercut the policy rationales for the automatic enrollment requirement. Finding itself without a champion or a purpose, the automatic enrollment requirement has now ceased to be, courtesy of the Bipartisan Budget Act of 2015.
Timothy G. Verrall is a shareholder in the Houston office of Ogletree Deakins where he advises a diverse range of clients on a wide variety of employee benefit plan issues arising under ERISA, the Internal Revenue Code, and related federal and state laws including the following: Employee Benefit Plan Design & Administration. Representation of public, private, non-profit, and governmental employers in connection with the design, implementation, and administration of retirement, health and...