3 min. readlast update: 12.04.2023

An often-overlooked yet crucial requirement within the Affordable Care Act (ACA) mandates that Health Insurers must annually waive their minimum employer-contribution and employee-participation rules. The ACA stipulates a one-month Special Open Enrollment Window specifically for January 1st coverage.

This unique enrollment period spans from November 15th to December 15th each year, providing eligible small group employers the opportunity to enroll for coverage effective the following January 1st.


The ACA's "guaranteed issuance of coverage in the individual and group market" section obliges health insurers offering coverage in a state to accept every employer and individual applying for such coverage in that state. This guarantee is limited to (special) open enrollment periods and is applicable only to applicants residing or working within the plans' service area(s).

Participation and Contribution Requirements:

In several states, including California and Nevada, carriers may refuse to issue group health coverage if fewer than 70% of employees opt for enrollment. Some carriers may impose even more stringent participation requirements.

Typically, employees with alternative coverage (such as Medicare, other group coverage, individual coverage through the Exchange, etc.) are excluded from participation requirement calculations, although this varies among insurance carriers.

Moreover, employer contribution rules necessitate a specific percentage of premium costs to be contributed by employers for all employees to obtain group health coverage. Some businesses face challenges meeting these contribution requirements due to various financial reasons.

Problem Resolution: Special Open Enrollment Period:

Numerous employers aspire to provide coverage to their employees but encounter difficulties meeting participation and/or contribution requirements. Employers cannot compel employees to enroll in coverage unless the employer covers 100% of the employees' premiums—a financial burden many employers cannot bear. Even with moderate to generous employer contributions, many employers witness young and lower-income employees opting out of coverage. This challenge became more pronounced in 2019, following the reduction of the ACA's federal Individual Mandate non-compliance penalty to $0.00.

The U.S. Department of Health & Human Services offers definitive guidance on this matter in regulation 147.104(b)(1): "In the case of health insurance coverage offered in the small group market, a health insurance issuer may limit the availability of coverage to an annual enrollment period that begins November 15 and extends through December 15 of each year in the case of a plan sponsor that is unable to comply with a material plan provision relating to employer contribution or group participation rules."

If your employer groups encounter challenges with participation and/or contribution, the Special Open Enrollment Window provides the opportune time to enroll them in coverage. 

To discuss your situation or learn more about options available to you or your employees at your small business, contact us here.
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