The Patient Protection and Affordable Care Act (“Health Care Reform”) requires that employers subject to the Fair Labor Standards Act provide employees with a notice of coverage options available through the Health Insurance Marketplace (the “Marketplace,” also referred to as the “Exchange”). Although originally this requirement was to have been effective March 1, 2013, it was delayed so that it could be coordinated with educational efforts about the Marketplace and guidance from the IRS regarding the “minimum value” requirement under the Employer Shared Responsibility rules. The Department of Labor (“DOL”) issued temporary guidance on May 8, 2013, providing that the notice of coverage options available through the Marketplace (“Exchange Notice”) must be furnished beginning no later than October 1, 2013. Employers are entitled to rely on the temporary guidance until the DOL issues regulations or other guidance, and will be provided time to comply with any additional or modified requirements.

Which Employers are Subject?

The Exchange Notice requirement applies to employers subject to the Fair Labor Standards Act (“FLSA”). FLSA generally applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. FLSA also specifically covers hospitals and resident care institutions for the sick, disabled, and aged; schools; and state and local government agencies. Special additional rules and exceptions apply and are summarized at . An internet compliance assistance tool is available at

Elements of Exchange Notice

The Exchange Notice must be in writing and must:

  • Inform the employee of the existence of the Marketplace, describe the services of the Marketplace and provide contact information about the marketplace;
  • If the employer plan does not provide minimum value (i.e., generally, if the plan reimburses less than 60 percent of the costs of a typical employer plan, as determined under other guidance), inform the employee that he or she may be eligible for a premium tax credit by purchasing a qualified health plan through the Marketplace; and
  • Inform the employee that, if he or she purchases a plan through the Marketplace, the employee may lose the employer contribution (if any) to any employer-provided health plan and that such contribution may be excludable from taxable income.

Model Exchange Notices

The DOL has issued two model Exchange notices – one for employers who do not offer a health plan and one for employers who do (either to some or to all of their employees). The models require the employer to enter certain information before use. Notably, the model notice for an employer which offers health coverage requires the employer to disclose whether its plan meets the minimum value standard and whether the cost of coverage is intended to be affordable (all as necessary to avoid excise taxes under the Employer Shared Responsibility Mandate). Links to the models are available on

Which Employees Must Receive the Exchange Notice?

The Exchange Notice must be provided to all employees, regardless of whether they are enrolled in an employer-sponsored health plan, and regardless of whether they are full- or part-time. Dependents of employees need not be sent the Exchange Notice.

Timing and Delivery of Exchange Notice

If an employee is employed before October 1, 2013, he or she must be provided the Exchange Notice by October 1, 2013. Any employee hired on or after October 1, 2013 must be provided with the Exchange Notice at the time of hiring. Beginning in 2014, the DOL will consider the “time of hiring” to be any time within 14 days of an employee’s start date. Note that the DOL has not explicitly provided this 14-day window for employees hired between October 1 and December 31, 2013, so cautious employers may wish to provide the Exchange Notice to employees hired during that time on the employees’ actual start dates.

The Exchange Notice may be provided by first-class mail. If it is provided electronically, it must comply with the DOL’s electronic disclosure safe harbor.

New Model COBRA Notice

The DOL believes that those employees and dependents eligible for COBRA continuation coverage may want to consider and compare health coverage alternatives to COBRA that are available through the Marketplace. Accordingly, it developed and released a new model COBRA election notice that may be used to satisfy the requirement to provide such notices. The new notice informs COBRA qualified beneficiaries that they could be eligible for a tax credit by purchasing coverage through the Marketplace, and that being eligible for COBRA does not limit eligibility for such a tax credit.