Implementing ACA, Windsor Decision Affects Open Enrollment

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Most employers offering health and welfare benefits let employees enroll or change their coverage once a year in an open-enrollment period that is not legally required by the Employee Retirement Income Security Act, but that lets employers communicate benefit changes and consolidate the burden of benefit enrollment.

“This year, many employers are using open enrollment as a way to communicate and deliver items that are now required due to health care reform and other legal developments,” said Douglas Dahl, associate with the Washington office of Proskauer Rose LLP and member of the firm's Employee Benefits, Executive Compensation & ERISA Litigation Practice Center.

Affecting open-enrollment procedures for coverage starting in 2014 are efforts to implement the Affordable Care Act (Pub. L. 111-148) as well as the Supreme Court's June 26 ruling in United States v. Windsor that invalidated Section 3 of the Defense of Marriage Act, Dahl said.

Open enrollment might help certain large employers meet ACA requirements to offer employees the chance to enroll in minimum essential health coverage starting Jan. 1, 2015, Dahl said. The ACA requires employers of at least 50 full-time equivalent employees to offer minimum coverage to avoid penalties.

Medicare Part D Notices

Because the ACA requires group health plans offering prescription drug coverage to issue Medicare Part D notices to Medicare-eligible participants and beneficiaries each year by Oct. 15, employers with open-enrollment periods that start by Oct. 15, 2013, should distribute the Medicare notices of creditable or non-creditable coverage with other open-enrollment materials, Dahl said.

The ACA changed the enrollment period for Medicare Part D coverage so that it extends from Oct. 15 to Dec. 7, rather than from Nov. 15 to Dec. 15, which was the previous enrollment period. This change gives potential enrollees more time to pursue coverage, Dahl said.

The Medicare Part D notices should be mailed separately to dependents whom the sponsor knows are entitled to Medicare, Dahl said.

Employers that incorporate the required Medicare Part D information into other plan-participant information or notices should make prominent reference to the Medicare information in a box that is boldface or offset on the first page of the plan-participation documents, Dahl said.


 

Implementation of the ACA has affected the types of notices to be provided to employees and the times to distribute them.  

Marketplace Notices

Employers were required to provide employees by Oct. 1, 2013, with a notice detailing health-coverage options available through the state-based, federal-state partnerships and federally funded public health-care exchanges under the Labor Department's Technical Release No. 2013-02, which helped implement the ACA, Dahl said.

Employees hired after Oct. 1, 2013, must be provided the notice within 14 days of their employment start date.

Employers are not to be penalized if they did not timely provide the notice for employees by Oct. 1, 2013, or do not timely provide the notice to new hires, the Labor Department said in guidance issued after the technical release.

Employers may distribute the notice to employees hired during the open-enrollment period, along with their open-enrollment benefit materials, Dahl said.

The notice should detail the services that the health-care exchanges provide and should specify that employees not offered minimum essential health coverage by their employer may obtain a premium assistance tax credit for purchasing coverage through a marketplace, as long as the minimum coverage was not available to them through any other source, Dahl said.

Employers can develop their own notices or use model notices available from the Labor Department's website. One model notice is for employers that offer health coverage to employees, and another notice is for employers that do not.

Same-Sex Spousal Treatment

Employers should confirm that references to spouses in employee benefit plan documents and open-enrollment materials accurately reflect how their plans are being administered after the Supreme Court's decision in United States v. Windsor , Dahl said.

The Internal Revenue Service's Revenue Ruling 2013-17 (64 BTM 284, 9/3/13), which implemented the high court's decision, established that same-sex spouses must be treated the same as opposite-sex spouses regarding the federal tax treatment of benefits provided to them, regardless of their state of residency.

Employers no longer should impute the value of health coverage provided to same-sex spouses, Dahl said. The court's decision, and the IRS implementation of the decision, did not affect federal tax treatment of benefits provided to same-sex domestic partners, he said.

“Employers should thus pay particular attention to the definition of spouse and the description of domestic partner benefits, and the conditions under which such benefits are available, in their open enrollment materials and be sure that these provisions convey how the plans will be administered in the coming year,” Dahl said.