Dive Brief:
- Larger employers caught a break recently, as the federal budget bill -- signed by President Obama -- included a repeal of the much-maligned health reform provision requiring larger employers to automatically enroll their full-time employees in a health plan.
- According to a client alert from the Lockton Benefit Group, when the Affordable Care Act (ACA) was passed in 2010, it required employers with 200 or more full-time employees (FTEs) that offered a health plan to automatically enroll new FTEs in health coverage.
- The ACA never specified when employers needed to start the automatic enrollment process, and in 2012 federal authorities said they were not going to enforce this rule until they issued regulations to address it (regulations were never issued). Now, it's moot.
Dive Insight:
Delays were good. Repeal is even better, according to Lockton. There was a good reason for the move, as the Congressional Budget Office estimates that repealing automatic enrollment will save the government about $7.9 billion in lost tax revenue over the next ten years.
The reason? Dollars spent on employer-provided health coverage are generally not taxed, which means increased spending on employer-provided health coverage results in less tax revenue for the government.
Lockton noted that the repeal serves as a "backdrop to the current discussion" in Congress about repealing the 40% excise tax on certain medical coverage, aka the Cadillac tax set to take effect in 2018. The Cadillac tax is expected to offset a significant portion of the long-term cost of the ACA overall, but Congress is under intense pressure to repeal the Cadillac tax. Some commentators thought Congress might wait to repeal automatic enrollment in order to use the costs savings to offset the loss of anticipated Cadillac tax revenue, if that tax is repealed.
No doubt more to come as the Cadillac tax debate intensifies.
