ACA’s automatic enrollment requirement repealed
- On Nov. 2, 2015, a law was enacted to repeal the ACA’s automatic enrollment requirement.
- Employers will not be required to automatically enroll employees in coverage.
- In certain cases, employers can choose to implement an automatic enrollment process, if employees are provided adequate notice and an opportunity to opt out.
Affordable Care Act (ACA) included an automatic enrollment requirement for certain large employers. This
requirement was not yet effective. It was intended to take effect once final regulations were issued and a final
effective date was specified.
On Nov. 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015 , which included a provision repealing the ACA’s automatic enrollment requirement .
Overview of automatic enrollment
Impact of the repeal on employers
A number of experts expressed questions and concerns about this automatic enrollment requirement, primarily on how employers would effectively administer the provision. According to some, this could have caused a number of problems, such as having employees enrolled in the employer’s coverage who are also covered by a spouse’s plan.
Although the ACA’s automatic enrollment requirement has now been repealed, the Internal Revenue Service (IRS) has previously issued guidance in Internal Revenue Bulletin 2002 - 20 and in a proposed rule from 2007 that employers can choose to use an automatic enrollment process under certain circumstances. This would allow an employer to enroll an eligible employee in the employer’s plan , unless the employee affirmatively elects otherwise. This process often involves a deduction f rom the employee’s wages that is contributed to the plan on the employee’s behalf.
In general, any employer using an automatic enrollment arrangement would need to provide adequate notice to employees and an opportunity for employee s to opt out of the coverage . Employers should also be aware of any applicable wage withholding laws in their state, which may require an affirmative election from employees before any deductions can be made. Because of these issues, employers may want to consult with legal counsel before implementing any automatic enrollment arrangement.