One More Provision of ACA is Repealed: Auto Enrollment

Signaling an end to the partisan bickering that has plagued Washington for the past several years, Congress has agreed to a deal on government funding through March 2017. If, as expected, President Obama signs this measure, the government will go on through the upcoming election settling the threat of sequestration in what is seen as a “house cleaning” for Paul Ryan to take over as speaker.

I was pleased to see that, hidden in the agreement, was the repeal of the auto-enrollment requirement included in the Affordable Care Act. This diffuses one of three time bombs yet to be rolled out under the law. The Cadillac Tax, which I discussed in a prior blog, looks like it is heading for repeal, or at least significant modification.

The final potential explosive that hasn’t gotten a lot of press is the Section 105(h) nondiscrimination rules. These require that plans treat all participants equally; however, the devil in this provision is in the details. Barring repeal, these details won’t be known until the regulations are written. Will this mean that the employer’s offer of coverage must be equal to all employees? Or will rules similar to 401(k) plans be written, and the discrimination test would be applied to actual plan enrollments? In my opinion, testing actual participation would be a death knell for plan choice, since more costly plans are generally chosen by more well-heeled employees. The collateral damage is that higher utilizers also choose richer plans. As a result, we will see lowest common denominator benefit plans as single offerings. We may have to wait for this one to settle though.

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