What you need to know:

Employers must distribute notices of public exchange coverage to employees by October 1, 2013 to ensure compliance with the Patient Protection and Affordable Care Act.

What you need to do:

Employers must review the model notices issued by the Department of Labor, tailor them to their specific circumstances, and ensure delivery of the notices to current employees by October 1.  Going forward, the notices must be delivered to new employees at the time of hiring. 

Under the Affordable Care Act, employers are required to provide their employees with a notice of the availability of coverage through public health exchanges—the new marketplace established under the Affordable Care Act where individuals and small businesses may purchase health insurance beginning in 2014. 

Employers subject to this requirement are those that are subject to the Fair Labor Standards Act.  Generally, the FLSA applies to employers that employ one or more employees and who are engaged in, or produce goods for, interstate commerce, and typically the employer must do more than $500,000 in annual dollar volume of business for FLSA to apply.  However, certain entities are specifically covered, whether or not their dollar volume of the business reaches the $500,000 mark.  A Department of Labor online compliance tool can assist employers in determining whether they are covered by the FLSA.

The notice must be distributed to all current full-time and part-time employees by October 1 (whether or not they are covered by the health plan) and to new employees at the time of hiring.  With respect to new employees, a notice will be deemed provided at the time of hiring if provided within 14 days of an employee’s start date.  The written notice must include:

  • information about the availability of exchanges;
  • if the employer’s plan does not meet certain requirements, a statement that the employee may be eligible for premium tax credits (depending upon household income) if coverage is purchased through the exchange;  and
  • notice that the employee might lose the tax-free employer contribution toward the cost of health coverage if coverage is purchased through an exchange.

Notices must be provided automatically and free of charge.  They may be delivered by first class mail or in a manner consistent with the DOL’s electronic disclosure safe harbor.  Employers may use insurers, multiemployer plans (if applicable), or third-party administrators to provide the notices. 

The DOL has issued two versions of the model notice:  one for employers who do not offer health plans and one for those who offer health plans to some or all employees.  Spanish versions are also available.

The good news for employers is that a recently issued DOL FAQ provides that employers who fail to comply with the notice requirements will not be subject to a fine or penalty.

Massachusetts employers should be aware that the Health Connector has issued its own Massachusetts-specific template that employers may use to satisfy the notice requirement.  The use of this form is optional and may be accessed on the Health Connector’s website.  The template contains information about any pre-tax contribution plans offered by the employer that meet the state’s Section 125 requirement.   

Although fair share reporting and contributions (under Massachusetts reform law) were repealed effective as of July 1, 2013, employer health insurance responsibility disclosure (HIRD) forms are no longer required to be submitted to the state, and employee HIRD forms need not be collected from employees who decline coverage, employers still must provide a notice to employees disclosing Section 125 cafeteria plan information.  Completion of the template will satisfy the state’s Section 125 noticing requirement.