Large employer auto-enroll delayed

The mandate that requires companies with more than 200 full-time employees to automatically enroll employees in their medical plans has been delayed until final guidelines are released in 2014. (To be considered full-time, employees must work for at least 30 hours of service per week based on a monthly average.)

This requirement of health care reform is intended to increase employee participation in available workplace health plans by making it easier for employees to participate, because it requires no action on their part. Employees can “opt out” of coverage, which requires them to take action. This strategy has proven to be successful at increasing plan participation because many people may not be motivated to read up on a plan and make a decision to participate, but they will stay in if the coverage is already selected for them. This strategy is frequently used in workplace retirement plans.

The auto-enrollment mandate did not have a specific start date listed in the original law. Last year, the government announced it would be on hold until guidelines were developed. Then in February 2012, the Department of Labor, Health and Human Services and the Internal Revenue Service issued a statement noting that auto-enrollment will not go into effect until final regulations are released, and those regulations are not expected until 2014. In addition, the government’s Employee Benefits Security Administration and the Department of the Treasury will coordinate to develop rules that will help employers determine which employees qualify for full-time employee status according to the Internal Revenue Code as it was amended by health care reform.

Impact on employers — Once this provision is implemented, employers with 200 or more full-time employees will need to incorporate auto-enrollment and opt-out functions in their enrollment process.

Impact on individuals — Individuals will need to determine if they want to remain enrolled in their employer’s plan or choose other coverage that may be available through a spouse, parent, government program or Health Insurance Exchange.