Budget Legislation Would Repeal Auto-Enrollment Requirement For Large Employers

Implementing Health Reform. On October 27, 2015, the provisions of the proposed Bipartisan Budget Act of 2015 became publicly available. If adopted, this legislation would, among other things, increase caps on discretionary spending for 2016 and 2017, which could free up spending for Affordable Care Act (ACA) implementation.

It is proceeding on a separate track from the Budget Reconciliation Act, which is directed at mandatory spending and taxes and will certainly be vetoed if adopted by the Senate. It also does not itself appropriate funding for government agencies, and thus does not preclude further attempts at limiting expenditures for ACA implementation in appropriations bills that will follow.

Only one provision of the Bipartisan Budget Act is directly relevant to the Affordable Care Act. That provision repeals section 1511 of the ACA, which requires employers that offer health insurance and that employ more than 200 employees to automatically enroll new employees in a health plan, subject to any legal waiting periods. Section 1511 further requires employers to give employees notice that they can opt out of the plans in which they are auto-enrolled in at any time. This is a “nudge” provision, intended to reverse the course of inertia and encourage enrollment in coverage by employees who might otherwise forgo doing so if they had to initiate enrollment on their own.

Implementing the provision, which has been generally opposed by business interests, has been a very low priority for the administration, and its repeal will not seriously affect the general scheme of the ACA. The Department of Labor (DOL) announced in late 2010 that it read the provision as not taking effect until it issued implementing regulations and that it did not intend to do so until 2014. In a second guidance issued in 2012, DOL stated that it would not be ready to implement the provision by 2014 given the need to coordinate implementation of the provision with other more important provisions such as the employer mandate and the ban on waiting periods exceeding 90 days. It projected no deadline for implementing the provision. DOL reiterated that employers did not need to comply with the provision until it issued rules.

Repeal of the provision is also included in the budget reconciliation bill recently passed by the House. The Congressional Budget Office (CBO) projects that repeal of this provision would reduce the number of people covered by employer-sponsored insurance by 750,000 beginning in 2017 when the provision might first be enforced, and that 90 percent of these people would remain uninsured. Repeal would reduce the budget deficit by $7.9 billion over the 2016-2025 period because employees would receive more taxable income rather than health benefits, which are not taxable, and because of increased individual responsibility penalty payments.

from Health Affairs Blog http://ift.tt/1Nyf7Zx