The Department of Labor (DOL) has postponed the deadline for employers to provide their employees with written notice informing them of the existence of state-based health insurance exchanges created by the Affordable Care Act (ACA). The Act originally required employers to provide the notice to current employees beginning March 1, 2013, and each employee at the time of hiring thereafter.
The DOL has now stated that employers will not be required to comply with the notice requirement until the agency has issued regulations implementing the requirement and such regulations become applicable. The DOL intends to coordinate the notice with the Department of Health and Human Service’s educational efforts and the Internal Revenue Service’s guidance on the ACA’s tax provisions. The agency expects that the delay in enforcing the notice requirement will be until “late summer or fall of 2013,” which will coordinate with the open enrollment period for the state-based health insurance exchanges. In the meantime, the DOL is also considering providing employers with model language that could be used to satisfy the notice requirement.
According to the ACA, the notice must inform 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. The insurance exchanges in most states are not yet operational, however. Many states are behind schedule because they have chosen to let the federal government step in and operate an exchange on their behalf. Employers have therefore been faced with the following dilemma: How can they provide employees with contact information for an insurance exchange that does not exist? The DOL has attempted to solve this problem by delaying enforcement of the notice requirement until the exchanges are up and running, presumably later this year.
The ACA requires the notice to contain several other pieces of information in addition to the contact information for the insurance exchange. 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 if the employee purchases a qualified health plan through the state insurance exchange. Lastly, 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.