A little-known exception for small businesses but most important under Affordable Care Act (ACA) is for Health Insurers must waive their minimum employer-contribution and employee-participation rules once a year. ACA requires a one-month Special Open Enrollment Window for January 1st coverage.

Background

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.”

Timeline:

The annual Federal Employees Health Benefits (FEHB) Open Season is taking place from November 14, 2022 – December 12, 2022 this year. The annual open season provides federal employees, annuitants, and other eligible individuals the opportunity to review their plan options, make changes, and enroll for the upcoming benefit year that begins January 1, 2023.

Employers, if your group struggling with participation and/or contribution, the Special Open Enrollment Window is the time to enroll them in coverage.

Contact us today.

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