One of the most important features of the Affordable Care Act (ACA) is the creation of state-based health insurance exchanges. These exchanges will serve as marketplaces where individuals and small businesses can shop for health insurance coverage. The exchanges will also provide consumer-oriented information that allows comparison of available plans based on price, benefits, services and quality. The state insurance exchanges must be fully operational on January 1, 2014. States have the option of setting up their own exchange or cooperating with the federal government to create an exchange. If the state choses neither option, then the federal government will step in to create and operate an exchange on behalf of the state.
The ACA also requires an employer to provide an employee with written notice informing the employee of the existence of the insurance exchange and the manner in which the employee may contact the exchange to request assistance in purchasing coverage. If the employer's plan share of the total allowed costs of benefits is less than 60 percent of such costs, then the notice must also inform the employee that he or she may be eligible for a premium tax credit and a cost sharing reduction under the ACA if the employee purchases a qualified health plan through the state insurance exchange. Finally, the notice must inform the employee that if the employee purchases a qualified health plan through the exchange, the employee will 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 excluded from income for federal income tax purposes.
Employers must provide the notice to current employees beginning March 1, 2013, and each employee at the time of hiring thereafter. All employers who are subject to the Fair Labor Standards Act (FLSA) must comply. The FLSA has very broad coverage, including businesses with at least two employees and annual dollar volume of sales or receipts of at least $500,000, hospitals, schools, and government agencies. Therefore, virtually all employers will need to comply with the exchange notice requirement. The U.S. Department of Labor is expected to release a model notice and additional guidance prior to the March 1, 2013 effective date.