Is the ACA the End of “One-Bite-of-the-Apple” Plans?

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Some employers only allow employees one chance to join their employer-sponsored health plan, or only give them one-bite-of-the-apple.  Failure to enroll when first eligible results in permanent loss of eligibility under the plan.  This prevents employees from waiving coverage, only to elect coverage once the employee gets sick, and hurting the employer’s experience at the next renewal.  These waiving employees could always enroll in coverage if they had a HIPAA “qualifying event.”

Now that the Affordable Care Act (ACA) removes pre-existing condition exclusions, an employee will receive immediate coverage for all pre-existing conditions whenever they enroll in a health plan.  Thus, the “one-bite-of-the-apple” plan was gaining popularity because it eliminated the risk that a newly sick employee would enroll and immediately begin going to the doctor for that pre-existing condition.

The employer shared responsibility provisions of the ACA may forbid this strategy.  According to these provisions, an offer of coverage must be made to employees and dependents no less than once per plan year.  The one-bite-of-the-apple approach only offers coverage to the employee and dependents once, which violates the ACA.  However, because the ACA excludes spouses as dependents, the one-bite-of-the-apple approach could still be used for spousal coverage.  Until further guidance is issued, one would assume that the one-bite-of-the-apple approach is no longer a viable strategy for employee coverage.