Although the effective dates of several employer shared responsibility provisions of the Affordable Care Act have been postponed until 2015, employers are required to provide a Notice to Employees of Coverage Options (“Notice”) under the Health Insurance Marketplace (also referred to as the “Exchange”) no later than Oct. 1, 2013. The Notice requirement applies to all employers who are subject to the requirements of the Fair Labor Standards Act (generally those employers who employ one or more employees and have at least $500,000 in annual dollar volume of business).
The Notice must be furnished to all employees (full-time and part-time) regardless of their eligibility for benefits under any employer-sponsored health plan. A separate Notice is not required for dependents or other non-employees who are or may become eligible for coverage under the employer’s health plan.
The Notice must contain the following information:
- It must inform employees of the existence of the Exchange, including services provided by the Exchange and the manner in which an employee may contact the Exchange to request assistance.
- If an employer maintains its own health plan, and its share of the total actuarially-projected costs of benefits provided under the plan is less than 60% of such costs, the Notice must inform employees that they may be eligible for a premium tax credit if they purchase coverage through the Exchange.
- The Notice must state that if an employee purchases a qualified health plan through the Exchange, the employee may lose the employer contribution (if any) to any health plan offered by the employer and that all or a portion of such contribution may be excludable from income for federal income tax purposes.
Employers are required to distribute the Notice to current employees no later than Oct. 1, 2013. On or after Oct. 1, 2013, employers are required to provide the Notice to new employees within 14 days of an employee’s start date. The Notice must be provided free of charge, written in a manner calculated to be understood by the average employee, and delivered by first-class mail or electronically in compliance with Department of Labor requirements.
To help employers comply with the obligation to provide the Notice, the Department of Labor has provided model Notices on its website. One model applies to employers who do not offer a health plan, and another model applies to employers who offer a health plan to some or all employees. Employers who rely on their insurance carrier or third-party administrator to distribute the Notice should work with that service provider to assure that the Notice is provided to all employees — not just to plan participants. Although the model Notices include a section for individualized information, employers should note that the instructions to the model Notice relating to these sections provide that they are optional.
Recent guidance issued by the Department of Labor states that no fine or penalty will be assessed for failure to provide the Notice. Employees may find the information in the Notice to be useful in deciding whether to purchase coverage through the Exchange and to apply for advance payment of premium tax credits.