Exchange Notice Requirements Change Under ACA
The Federal government has responded to employer’s requests for help in providing notice to employees about coverage options available through state exchanges (now referred to as the Health Insurance Marketplace).
To assist employers, Technical Release 2013-2 announced the availability of two model notices. As discussed below, one notice is for employers who offer a health plan to some or all employees, and the other notice is for employers who do not offer a health plan.
ACA initially required employers to provide a written notice to each employee at the time of hiring (or with respect to current employees, not later than March 1, 2013).
On January 24, 2013, the Federal Government announced it was delaying the effective date of notice requirement until late summer or early fall 2013, which would coordinate with the open enrollment period for the Marketplace.
However, Technical Release 2013-2 now states the government is issuing the model notices in advance of the expected timeframe because of several requests from employers wishing to inform their employees now about the upcoming coverage options through the Marketplace.
Which Employers are Subject to the Notice Requirement?
The notice requirement applies to employers subject to the Fair Labor Standards Act (FLSA), including those employing one or more employees engaged in, or who produce goods for, interstate commerce. For most companies, a test of not less than $500,000 in annual dollar volume of business applies. Accordingly, nearly all employers are subject to the notice requirement. The following entities must also comply: federal, state and local government agencies; preschools, elementary and secondary schools, and institutions of higher education; hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; and schools for children who are mentally or physically disabled or gifted.
Who Must be Provided Notice?
Employers must provide a notice of coverage options to each employee, regardless of 1) plan enrollment status (if applicable) or 2) part-time or full-time status. However, employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan, but who are not employees.
Form and Content of the Notice
The notice must include information regarding the existence of the Marketplace, as well as contact information and a description of the services provided by the Marketplace. The notice must also inform employees they may be eligible for a premium tax credit if they purchase a qualified health plan through the Marketplace. And, it must provide a statement informing employees that if they purchase a qualified health plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer, and that all or a portion of such contribution may be excludable, from income for Federal income tax purposes.
Timing and Delivery of Notice
Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.
With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice no later than October 1, 2013.
The notice is required to be provided automatically, free of charge. The notice must also be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor are met.
The government has provided two model notices to assist employers in providing the required information.
Notice for Employers without Health Plans This shorter notice is two pages, and describes the Marketplace, eligibility for a premium tax credit, a note that purchasing insurance through the Marketplace may eliminate any employer contribution or tax benefit that comes with employer-sponsored coverage, and that the employee contributions to the Marketplace are made on an after-tax basis.
The second page of the notice contains employer contact information that must be completed by the employer, as well as a statement that the notice recipient is not eligible for health coverage through the employer.
Notice for Employers With Health Plans In addition to the information above, the longer notice (three pages) includes specific information about the employer’s health plan, such as whether the plan meets the minimum value standard, and whether the plan’s coverage is affordable.
While the third page is to be completed by the employer, it is optional however, and is intended to provide the employee with the appropriate information about the cost of the employer plan to assist with applying for a premium subsidy if applicable.
Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.
These two model notices are available on the Department of Labor’s website at www.dol.gov/ebsa/healthreform. For ease of reference, the two model notices are linked below:
Model notice for employers who offer a health plan to some or all employees, available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
Model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf
If you have any questions, please do not hesitate to contact any member of the HealthSure team.