The Patient Protection and Affordable Care Act (ACA) imposes a new notice requirement on virtually all employers. Specifically, no later than October 1, 2013, employers must provide current employees with a written notice that describes, among other things, the health coverage that is available through the health insurance exchanges – now referred to as the Health Insurance Marketplace. The notice also must be provided to new employees hired on or after October 1, 2013.
Employers Subject to the Notice Requirement
This notice requirement applies to employers to which the Federal Fair Labor Standards Act (FLSA) applies. The FLSA generally applies to employers that employ one or more employees who are engaged in or produce goods for interstate commerce. The FLSA also specifically applies to hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies.
Overview of the Notice Requirement
The ACA provides that the content of the notice must adequately address the following:
- Inform the employee of the existence of the Marketplace, including a description of the services provided by the Marketplace and the manner in which the employee may contact the Marketplace to request assistance.
- If the employer’s plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Marketplace.
- If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution, if any, to any health benefits plan offered by the employer and all or a portion of such contribution may be excludable from income for federal income tax purposes.
To satisfy the content requirements for the notice, model language is available on the Department of Labor’s website. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan to some or all employees. Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.
Providing Notice to Employees
Employers must provide a notice of coverage options to each employee, including part-time or full-time employees and those who are enrolled in a health plan. Employers, however, are not required to provide notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.