One of many things required by the Affordable Care Act (ACA) is an annual one-month Special Open Enrollment Window (SOEW) for eligible small groups to enroll in coverage without having to meet standard employer-contribution and/or employee-participation ratios.
That annual SOEW is fast approaching, and will occur November 15 – December 15, for eligible employers to enroll their employees in coverage effective January 1, 2020.
Background
The SOEW is included in a part of the ACA called the “guaranteed issuance of coverage in the individual and group market.” It stipulates, “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.”
Guaranteed issuance of coverage can only be offered during (special) open enrollment periods, and plans can only be offered to applicants who live in, work in, or reside in the plans’ service area(s).
Participation and Contribution Requirements
In California and Nevada, carriers can decline to issue group health coverage if fewer than 70% of employees enroll in coverage. Some carriers have even tighter participation requirements.
Furthermore, rules require employers to contribute a certain percentage of premium costs for all employees in order to attain group health coverage.
While many employers want to offer coverage to employees, they can be denied because they struggle to meet participation and/or contribution requirements. Employers cannot force workers to enroll in coverage unless the employer pays 100% of the employees’ premiums, which many businesses cannot afford to do. Even with moderate to generous employer contributions, many employers find young and lower-income employees waiving coverage. This was particularly evident in 2019 when the ACA’s federal non-compliance penalty under the Individual Mandate was reduced to $0.00.
The ACA’s annual SOEW is designed to solve these participation and contribution problems.
U.S. Department of Health & Human Services regulation 147.104(b)(1) says: “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 you have client groups struggling with participation and/or contribution requirements, you can use the annual Special Open Enrollment Window to enroll them in coverage.
Applicable Large Employer (ALE) Consideration
It’s important to note 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 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 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, in order to meet the ACA ALE affordability criteria in 2020, a full-time 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.
Here to Help
You can count on Word & Brown to help you with quoting and enrollment of your SOEW groups. Call or email your Word & Brown representative, or contact any of our six regional offices in California and Nevada. If you have questions about the SOEW, contact the WBCompliance team at 866.375.2039, or send an email to ComplianceSupport@wordandbrown.com.
