The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees in order to avoid possible penalties. Because this employer mandate has been criticized as burdensome for employers and an impediment to business growth, it seems likely that its repeal will be part of any Republican plan to repeal and replace the ACA.
If the employer mandate is repealed, many ALEs will likely want to modify their plan designs to go back to pre-ACA eligibility rules (for example, requiring employees to have a 40-hour per week work schedule to be eligible for benefits). Employers may also consider increasing the amount that employees are required to contribute for group health plan coverage. When making plan design changes, employers should review their compliance obligations under the Employee Retirement Income Security Act (ERISA) and the ACA mandates that may remain intact. Considerations:
• As a general rule, employers can make changes to their health plans at any time.
• Employers with insured plans should check with their carriers before making mid-year changes.
• Any plan changes must be communicated to participants.
Even if the ACA’s employer mandate is repealed, the following ACA reforms will likely continue to impact plan eligibility rules:
• Restrictions on waiting periods;
• Dependent coverage to age 26; and
• Prohibition on rescissions of coverage.
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Links and Resources
- Understanding Your Fiduciary Obligations Under a Group Health Plan (Department of Labor (DOL) resource for health plan sponsors)
- The DOL’s Reporting and Disclosure Guide for Employee Benefit Plans