As part of the ongoing compliance efforts related to the Patient Protection and Affordable Care Act (PPACA), employers who are subject to the federal Fair Labor Standards Act (FLSA) must provide notice to their employees of the existence of health insurance exchange marketplaces no later than October 1, 2013. The U.S. Department of Labor (DOL) has simplified the requirement by providing the following model notices:
- For employers offering coverage: http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
- For employers not offering coverage: http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf
The notices are meant to inform employees that beginning January 1, 2014, they will have access to affordable health insurance coverage through the state health insurance exchanges. At this time, employers are expected to comply with the initial requirement by October 1; however, PPACA has no explicit penalty for failure to provide the notice.
Recipients and Delivery of Notice
Employers subject to the FLSA must provide notice to each employee (though not dependents), regardless of plan enrollment status. This means employers must provide the notice to both part- and full-time employees and must do so regardless of whether they actually provide health coverage.
After October 1, employers must provide the notice to each new hire within 14 days of the start date. The notice may be included in a new hire packet.
In technical guidance, the DOL has indicated that notice “may be provided by first-class mail [or] may be provided electronically” if it meets specific electronic disclosure requirements. Physical distribution may be an acceptable method, so long as the employer takes various steps to document such distribution. In any event, it is clear that simply posting the notice at an employer’s worksite would not be sufficient.
Contents of Notice
The DOL outlined the three pieces of information that must be included in each notice:
- Information regarding the existence of a new marketplace as well as contact information and description of the services provided by the marketplace;
- Notice that the employee may be eligible for a premium tax credit if he or she purchases a qualified health plan through the marketplace; and
- A statement informing the employee that if he or she purchases a qualified health plan through the marketplace, they may lose the employer contribution to any health benefits plan and that all or a portion of such contribution may be excludable from income for federal income tax purposes.
Arguably, the model notice requires employers to provide more detailed information than the requirements outlined in the technical guidance cited above. For instance, the model notice requires employers to determine whether their coverage meets the minimum value and affordability tests. However, because employers will be required to provide this information to employees upon request as of October 1, the model notice can serve as a primer for the deluge of questions expected to come from employees.
PPACA deadlines are anything but predictable. We recommend clients take a minimalist approach with respect to their notices, and also wait until the Oct. 1 deadline draws nearer before providing the notices. If the past is any indication, the DOL may provide more substantive guidance with respect to the notice requirements, which may shift or alter the manner in which an employer provides the notice. We also would not be surprised if the DOL postponed the notice requirement.