A handful of important Affordable Care Act provisions affecting employers and employer-sponsored group health plans take effect in or after 2014. Some provisions, such as the employer shared responsibility rules under Internal Revenue Code § 4980H, and standards that apply to waiting periods under Public Health Service Act § 2708, do so by the Act’s terms, while others, such as amendments to the Fair Labor Standards Act (that technically took effect on enactment), do so as a matter of regulatory grace. Either way, the Affordable Care Act will require major changes to the design, maintenance, and operation of employer-sponsored (and other) group health plans. A recently issued set of frequently asked questions (FAQs) from the Departments of Health and Human Services, Labor, and Treasury/IRS (collectively, the “Departments”) provide interim relief in certain instances, and signal the Departments’ thinking as to others. This client advisory explains and summarizes the FAQs.

Automatic Enrollment

The Act adds new Fair Labor Standards Act (FLSA) § 18A requiring employers subject to the FLSA that have more than 200 full-time employees to automatically enroll new full-time employees in one of the employer’s health benefits plans (subject to any waiting period authorized by law), and to continue the enrollment of current employees in a health benefits plan offered through the employer. Employers subject to the Act’s automatic enrollment requirement must provide adequate notice and the opportunity for an employee to opt out of any coverage in which the employee was automatically enrolled. The Act specifies no special or deferred effective date for the automatic enrollment rules, which means that the rule is technically effective on enactment (i.e., March 23, 2010). But in a set of frequently asked questions issued December 22, 2010, the Labor Department deferred enforcement until the issuance of regulations.

According to the FAQs, “the Department of Labor has concluded that its automatic enrollment guidance will not be ready to take effect by 2014.” Therefore, employers are not required to comply with FLSA section 18A until after 2014.

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