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Budget Agreement Repeals Health Care Reform’s Automatic Enrollment Provision

Bipartisan Budget Act of 2015, Pub. L. No. 114-74, § 604 (Nov. 2, 2015)

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Visit the Health Care Reform Community on Checkpoint to join the discussion on this development (for Checkpoint subscribers to EBIA’s Health Care Reform manual).

The President has signed bipartisan budget legislation that, among other things, repeals health care reform’s automatic enrollment requirement. As background, health care reform amended the Fair Labor Standards Act (FLSA) to require certain large employers to automatically enroll new full-time employees in one of the employer’s group health plans and to continue the enrollment of current employees. (The requirement generally applied to employers that were subject to the FLSA, that had more than 200 full-time employees, and that had one or more health benefit plans.) No effective date had been specified, and 2012 agency guidance had indicated that employers were not required to comply until the issuance of final regulations (see our article).

EBIA Comment: Because repeal of automatic enrollment occurred before final regulations were issued, employers were never required to comply with this provision. Some business groups had lobbied for the repeal, arguing that health care reform already requires individuals to have coverage or pay a penalty (under the so-called individual mandate) and that automatic enrollment could negatively impact employees’ eligibility for premium tax credits under the Exchange. The repeal is the only provision of the budget legislation with a direct impact on employer-sponsored group health plans. Other benefits-related provisions affect defined benefit pension plans (e.g., Pension Benefit Guaranty Corporation (PBGC) premium increases, extension of funding stabilization rates, and increased flexibility for plan-specific mortality tables). For more information, see EBIA’s Health Care Reform manual at Section XXXI (“Automatic Enrollment”). See also EBIA’s Self-Insured Health Plans manual at Section XVI.C (“Types of Enrollment”) and EBIA’s Cafeteria Plans manual at Section XVII.J.1 (“Impact of Health Care Reform on Cafeteria Plans: Automatic Enrollment”).

Contributing Editors: EBIA Staff.

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