The Affordable Care Act (ACA) requires medical health insurers to offer an annual one-month Special Open Enrollment Window (SOEW), when eligible Small Group employers can purchase medical coverage without having to meet standard employer-contribution and/or employee-participation ratios.
The SOEW occurs November 15 through December 15 of each year, allowing eligible Small Group employers to enroll for coverage effective January 1 of the following year.
Small Group health insurance carriers have tight timeframes and important rules to be aware of regarding new-business submissions during SOEW. Word & Brown has developed state-specific resources that explain medical carriers’ underwriting rules, requirements, and extra procedural information for the 2023 Special Open Enrollment Window. Download the California SOEW reference piece and Nevada SOEW reference piece for more information on Small Group carriers’ SOEW polices to follow.
Background
The ACA has a section regarding guaranteed issuance of health insurance for applicants in the Individual and Small Group markets. It stipulates that all health insurers in such markets must accept every employer and individual applicant seeking to obtain coverage, so long as the applicants live in, work in, or reside in the plans’ service area(s). The section additionally specifies that this guaranteed issuance of coverage may only be permitted and offered during (special) open enrollment periods.
Participation and Contribution Requirements
In many states (including California and Nevada), carriers can decline to issue group health coverage if fewer than 50-70% of employees elect to enroll. Some carriers have even tighter participation requirements.
Furthermore, insurance carriers’ underwriting contribution rules require employers to contribute a certain percentage of premium costs for all employees to attain group health coverage. Some businesses struggle to meet these contribution requirements for a variety of financial and other reasons.
Problem Solved: Special Open Enrollment Window
Many employers want to offer coverage to their employees but are denied from doing so, due to struggles with participation and/or contribution requirements.
Even with moderate to more generous contributions, many employers still find younger and lower-income employees waiving coverage.
This has been especially evident since 2019, with the ACA’s federal Individual Mandate non-compliance penalty reduced to $0.00. Although, at least in California, that changed a bit in 2020 when the state implemented its own Individual Mandate, with steep non-compliance penalties for adults and families in California. Nevada and most other states do not have state individual mandate requirements.
If your employer groups (in the Small Group market) struggle to meet participation and/or contribution requirements, the Special Open Enrollment Window is the time to enroll them in coverage.
Important ACA Consideration for Applicable Large Employers (ALEs)
It’s important to note that Applicable Large Employers (ALEs) are still subject to the ACA’s Employer Shared Responsibility mandate – even when/if the ALE enrolls in coverage during this SOEW without having to meet standard participation and contribution requirements.
The Employer Shared Responsibility mandate requires ALEs to offer affordable medical coverage (of minimum value) to full-time (FT) employees and their dependents to age 26 or face potential non-compliance penalties. The affordability ratio for plan years beginning in 2024 is 8.39%. This means a FT employee’s monthly contribution for the lowest-cost, minimum-value plan offered by the ALE (at the employee-only rate) should not exceed 8.39% of the employee’s monthly Rate of Pay, 2024 W-2 Box 1 income, or the Federal Poverty Level. Otherwise, the ALE will not satisfy the ACA’s employer mandate.
For further ACA detail, refer to Word & Brown’s exclusive 2024 ACA Quick Reference Guide and ACA Affordability Guide.
Carrier References
Word & Brown has developed state-specific resources that explain medical carriers’ Underwriting rules, requirements, and extra procedural information for the latest Special Open Enrollment Window. Use the links above to download these pieces.