The Patient Protection and Affordable Care Act requires employers to furnish employees a notice of the availability of coverage through public health insurance exchanges, i.e., the “Marketplace.” The Department of Labor requires that employers give employees the notice by October 1, 2013. Department of Labor Technical Release 2013-02 provides temporary guidance and templates for the notice.
All employers that are covered by the Fair Labor Standards Act — that is, virtually all employers with annual sales or receipts of at least $500,000, as well as hospitals, schools, government entities, and other specified employers — are subject to the notice requirement.
Which employees must be provided the notice?
Employers must provide the notice to each employee, regardless of plan enrollment status or part-time or full-time status. The definition of employee for this purpose is very broad. For example, service providers classified as independent contractors for tax purposes may be employees for FLSA purposes and, if so, they must receive the notice.
What form must the notice take and what are the content requirements?
The notice must be in writing, include information regarding the existence of the new marketplace/exchange and contact information, and describe the services provided by the marketplace/exchange.
The notice also must inform the employee that he or she may be eligible for a premium tax credit under the Internal Revenue Code if the employee purchases a qualified health plan through the marketplace/exchange.
In addition, the notice must inform the employee that by purchasing a qualified health plan through the marketplace/exchange, the employee may 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 excludable from income for federal income tax purposes.
How may the notice be delivered?
The notice may be provided by first class mail, electronically (if the Department of Labor’s electronic disclosure safe harbor is satisfied) or in person (although employers should be sure to document in-person delivery). For an employee hired on or after October 1, 2013 (the deadline for furnishing the notice to current employees), the employer must provide the notice within 14 days of the employee’s start date.
The Department of Labor also provided model notices — one template for employers who do not offer a health plan and another template for employers who do. Employers should note that the models contain more information than is required to be provided by law and the DOL Technical Release. Use of a model is not required. Employers should work with counsel in determining whether they want to use the model “as-is” or make modifications to it. The model language is available on the Department of Labor’s website.
Note: The Department of Labor has announced that an employer cannot be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace. However, employers should comply with the law and provide the notice.
Amendment to Model COBRA Election Notice
Employers should note that the Technical Release also provides a revised model COBRA election notice that includes information about the marketplace/exchange. The model election notice is available in modifiable, electronic form on the Department of Labor’s website.