As reported in our November 12, 2012 End of Year Plan Sponsor “To Do” Lists, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “Affordable Care Act”) requires most employers to provide all new hires and current employees with a written notice about the Health Benefit Exchange and the consequences of purchasing coverage through an Exchange rather than employer-sponsored coverage (the “Exchange Notice”). The Exchange Notice requirement was to take effect on March 1, 2013. Under the March 1 deadline, employers would have been required to give an Exchange Notice to all current employees by March 1, 2013 and, thereafter, to new employees at the time of hiring.
On January 24, 2013, the Department of Labor (the “DOL”), Health and Human Services, and the Treasury issued another set of Frequently Asked Questions (“FAQs”) on the Affordable Care Act. In FAQ 1, the DOL indicated that until regulations are issued and become applicable, employers are not required to comply with the Exchange Notice requirement. The DOL noted that it is committed to a smooth implementation process including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time. The DOL expects the timing for distribution of the Exchange Notice will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.
When it takes effect, the Exchange Notice must include certain specified information, including the following:
- the existence of the Exchange;
- a description of the services provided by the Exchange and how to contact the Exchange to request assistance;
- eligibility for premium tax credits or cost-sharing reductions through the Exchange if the employer plan’s share of the total cost of benefits under the plan is less than 60%; and
- an explanation that: (i) if the employee purchases a qualified health plan through the Exchange, then the employee may lose any employer contribution toward the cost of employer-provided coverage; and (ii) all or a portion of employer contributions to employer-provided coverage may be excludable for federal income tax purposes.
The DOL is considering providing model, generic language that could be used to satisfy the Exchange Notice requirement. Future guidance on complying with the Exchange Notice requirement is expected to provide flexibility and adequate time to comply.