On November 3, President Obama signed the Bipartisan Budget Act of 2015 (H.R. 1314), resulting in a repeal of the Patient Protection and Affordable Care Act’s (PPACA) automatic enrollment requirement for employers with 200 or more full-time employees. The Bipartisan Budget Act of 2015 repeals Section 18A of the Fair Labor Standards Act (FLSA), which was added by Section 1511 of PPACA. Implementation of automatic enrollment was postponed in December 2010 after the Department of Labor issued an FAQ stating that employers were not required to comply with PPACA’s automatic enrollment requirement until implementing regulations were issued.
An article published by the law firm Jackson Lewis made some helpful observations, namely that Section 125 of the Internal Revenue Code still permits employers to utilize “default” or “negative” elections when enrolling employees in health coverage or other benefits. Provided certain requirements are met, use of these election methods could result in automatic enrollment for some employees, although not mandated by PPACA. Employers intending to utilize these types of elections should review their Section 125 cafeteria plan documents to ensure the documents are consistent with the employer’s enrollment practices. State wage withholding laws should also be considered to determine whether an employee must provide affirmative consent before deductions may be taken from their pay.
As PPACA continues to evolve, it becomes increasingly important for employers to understand the requirements that apply based on their size, whether a plan is offered, and the funding mechanism for that plan. Working closely with a team of trusted benefits consultants, legal advisors, and tax professionals is essential to stay ahead of the curve.