Posted: October 2, 2019 by Paul Roberts
The Affordable Care Act (ACA) requires health insurers to offer a one-month Special Open Enrollment Window, when eligible small groups can enroll in coverage without having to meet standard employer-contribution and/or employee-participation ratios.
The special open enrollment period occurs November 15th through December 15th of each year, allowing eligible small group employers to enroll for coverage effective January 1st of the following year.
The ACA has a section in it called the “guaranteed issuance of coverage in the individual and group market.” It stipulates that “each health insurer that offers health insurance coverage in the individual or group market in the state must accept every employer and individual in the state that applies for such coverage.” The section also states that this guaranteed issuance of coverage can only be offered during (special) open enrollment periods, and that plans can only be offered to applicants that live in, work in, or reside in the plans’ service area(s).
Participation and Contribution Requirements
In many states (including California and Nevada), carriers can decline to issue group health coverage if fewer than 70% of employees elect to enroll in coverage. Some carriers may have even tighter participation requirements.
Generally speaking, employees with other coverage (Medicare, other group coverage, individual coverage through the Exchange, etc.) are removed from the participation requirement calculation – though it varies by insurance carrier.
Furthermore, employer contribution rules require employers to contribute a certain percentage of premium costs for all employees in order to attain group health coverage. Some businesses struggle to meet these contribution requirements for a variety of financial reasons.
Problem Solved: Special Open Enrollment Period
Many employers want to offer coverage to their employees, but are denied because they struggle to meet participation and/or contribution requirements. Employers cannot force employees to enroll in coverage unless the employer pays for 100% of the employees’ premiums, which many employers cannot afford. Even with moderate to generous employer contributions, many employers still find young and lower-income employees waiving coverage. This was even more evident in 2019 with the ACA’s federal Individual Mandate non-compliance penalty reduced to $0.00.
The U.S. Department of Health & Human Services provides final guidance on this in regulation 147.104(b)(1): “In the case of health insurance coverage offered in the small group market, a health insurance issuer may limit the availability of coverage to an annual enrollment period that begins November 15 and extends through December 15 of each year in the case of a plan sponsor that is unable to comply with a material plan provision relating to employer contribution or group participation rules.”
If your employer groups are struggling with participation and/or contribution, the Special Open Enrollment Window is the time to enroll them in coverage.
Important ACA Consideration for Applicable Large Employers (ALEs)
It’s important to note that ALEs with 50+ FTEs are still subject to the ACA’s Employer Shared Responsibility mandate – even when the ALE enrolls in coverage during this Special Open Enrollment Window without having to meet standard participation and contribution requirements.
The Employer Shared Responsibility mandate requires ALEs to offer affordable health coverage to full-time (FT) employees and their dependents to age 26, or face potential non-compliance penalties under IRS Section 4980H. The affordability ratio for plans beginning in January 2020 is 9.78%. This means a FT employee should not pay more than 9.78% of his or her rate of pay, end-of-year W-2 box 1 income, or of the Federal Poverty Level, on the lowest-cost plan offered by the employer that meets minimum value in order to satisfy the ALE ACA affordability criteria in 2020.
For more help with the Special Open Enrollment Window, consult your Word & Brown sales representative or WBCompliance team (call 866-375-2039 or send an email to ComplianceSupport@wordandbrown.com).
More about the author:
Paul Roberts is the Director of Education and Market Development at the Word & Brown General Agency, responsible for leading Word & Brown’s educational initiatives and providing oversight of the WBCompliance team in California and Nevada. Paul is a tenured veteran in the health insurance industry, carrying a long history of health insurance experience and an education in business management. He has performed nearly every operational role at Word & Brown General Agency in his fourteen-year tenure, and was a leader in the creation and development of Word & Brown’s legendary in-house Compliance team. Paul is passionate about education and keeping health insurance brokers and employers in-line with compliance. Paul can be found at many industry events across the nation delivering CE, HRCI and SHRM courses, educating himself, advocating for the role of the agent, and working directly with brokers and employers. This gives Paul the best ability to innovate and improve Compliance and educational resources to support the businesses and abilities of brokers. Paul is passionate about education, diversity and helping others. He is grateful for his opportunity to support both brokers and employers and is committed to your success.
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