Automatic Enrollment

Automatic Enrollment

The Affordable Care Act (ACA) requires certain large employers that offer health coverage to automatically enroll new employees (and re-enroll current employees) in one of the employer’s health plans, subject to any permissible waiting period. This requirement is found in Section 18A of the Fair Labor Standards Act (FLSA), which was created by the ACA. Section 18A further requires adequate notice to employees and the opportunity for an employee to opt out of any coverage in which the employee was automatically enrolled.

Employers are not yet required to comply with Section 18A. They will not have to comply until final regulations are issued and a final effective date is specified. When it is effective, the automatic enrollment rule will apply to employers that are subject to the FLSA and have more than 200 full-time employees.

On Dec. 22, 2010, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (the Departments) issued FAQs on section 18A of the FLSA. Also, on Feb. 9, 2012, the DOL issued Technical Release 2012-01 to answer questions from employers and other stakeholders on ACA’s automatic enrollment provisions.

The DOL has been working with stakeholders to ensure that it has the necessary information and data to develop regulations relating to automatic enrollment, and is sensitive to stakeholder concerns regarding the need for adequate time to comply with any regulations that are ultimately issued. In addition, the DOL is 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 ACA provisions, including the employer shared responsibility provision and the 90-day limitation on waiting periods.

The DOL originally intended to complete this rulemaking by 2014. In view of the need for coordinated guidance and a smooth implementation process, including an applicability date that gives employers sufficient time to comply, the DOL has concluded that its automatic enrollment guidance will not be ready to take effect by 2014.

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