Washington, D.C – Today, Congresswoman Elise Stefanik (R-NY-21) introduced the Be Open Act – commonsense legislation to help ensure that employer-sponsored coverage – the backbone of the US health care system – remains a competitive option for employees.
“I am proud to introduce this commonsense legislation to help ease an unnecessary and punitive burden placed on employees and employers under the Affordable Care Act,” said Congresswoman Stefanik. “This legislation simply repeals an unnecessary and duplicative part of this law that reduces choice in health coverage and creates confusion that can lead to significant tax penalties on both the employee and employer. I remain committed to achieving a healthcare system that works for North Country families and businesses, and this commonsense legislation is one step in that direction.”
The Be Open Act would repeal a requirement under the Affordable Care Act that new employees of certain employers be automatically enrolled in the employer’s health benefits plan. The text of this legislation can be found here. Reps. Richard Hudson (R-NC-08) and Tim Walberg (R-MI-07) are original cosponsors of this legislation. In addition, this legislation has the support of industry groups such as the American Builders and Contractors, the National Association of Convenience Stores, the National Grocers Association, and the National Restaurant Federation, among others.
Under section 1511 of the Affordable Care Act (ACA) (section 18A of Fair Labor Standards Act), employers with more than 200 full-time employees must automatically enroll a new full-time employee in a health plan within 90 days if he or she fails to choose or decline coverage. Employers are also required to continue to enroll current employees in a health plan. This requirement is in addition to the ACA’s individual and employer mandates, and other employee benefit laws.
Implications to employees health needs and paychecks
- Auto-enrollment does not provide employees the opportunity to select the coverage that best meets their own health care needs
- Auto-enrollment of employees into coverage could result in coverage that is unaffordable to an employee and lead to unanticipated reductions in take home pay; in some cases, premiums could exceed the amount of the paycheck
- Young adults, seniors, and veterans and their family members who are enrolled in other coverage such as a parent’s or spouse’s plan, Tricare or Medicaid will experience a disproportionate impact from auto-enrollment
- Unlike auto-enrollment in a 401K plan, in which contributions that are often based on a percentage of wages earned and belong to an employee and increase in value over time, health insurance premium contributions are fixed and immediately expended even if the employee is unaware of the coverage and does not use it
- Employees who are double-enrolled in coverage are potentially faced with paying multiple health premiums, paying a penalty to the plan they are seeking to cancel and/or triggering a tax penalty
- Employers may also be paying premium shares for coverage the employee does not want or will not use
Potential tax penalty liability for employees under auto-enrollment
- Auto-enrollment could trigger ACA tax penalties under the individual mandate (Code section 36B) for employees that are receiving tax-credits for coverage through an Exchange
- Auto-enrollment into a non-high deductible health plan could trigger tax penalties under Code section 223 for employees contributing to a health savings account (HSA)
Redundant and conflicts with the ACA and other federal laws
- Auto-enrollment is unnecessary and duplicative to the ACA’s individual and employer mandates
- Provisions of the Employee Retirement Income Security Act (ERISA), the Public Health Service Act (PHSA), the Internal Revenue Code and the FLSA already require plan sponsors to provide multiple notices and opportunities to opt-in or out of coverage
- Employers already provide comprehensive assistance and significant resources to help employees enroll and take advantage of the benefits available to them
- Mandatory auto-enrollment would likely result in confusion between employers’ and employees’ coverage responsibilities