This is the 33rd in a series of WorkCite articles concerning the Patient Protection and Affordable Care Act and its companion statute, the Health Care and Education Reconciliation Act of 2010 (referred to collectively as the Act). This article discusses the guidance issued last month by the Department of Labor (the DOL) in Technical Release 2013-02 (the Release) on the requirement under the Act for employers to provide notice to employees of coverage options available through the health insurance exchanges that are being established in each state under the Act. The federal government refers to the exchanges as the “Health Insurance Marketplace” (the Marketplace).
Beginning on Jan. 1, 2014, individuals and small business employees will have access to the Marketplace where they can compare and select from private health insurance options. Open enrollment for 2014 coverage through the Marketplace begins on Oct. 1, 2013. To ensure that individuals have adequate information regarding the Marketplace and the coverage options available to them, the Act requires employers to provide a one-time notice of coverage options to employees in advance of the open enrollment period. The notice must contain:
- Information regarding the Marketplace and how it works;
- A description of the eligibility requirements for the tax credit available to certain employees purchasing coverage through the Marketplace; and
- A statement that purchasing coverage through the Marketplace may cause the employee to lose the employer contribution to his or her employer-sponsored health plan (if any) and that all or a portion of such employer contributions may be excludable from income.
Guidance Provided by the Release
The DOL issued the Release in response to requests from employers for model language on a time frame earlier than had been anticipated by the DOL (late summer or fall of 2013), so that they may be able to inform their employees now about the upcoming coverage options through the Marketplace.
The Release provides details regarding:
- Which employers are required to provide the notice. The notice requirement applies to all employers that are subject to the Fair Labor Standards Act (FLSA) — generally, all employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce and that have an annual dollar volume of business of at least $500,000. The FLSA also specifically covers hospitals, schools, governmental agencies and residential institutions engaged in the care of the sick, elderly or disabled.
- Which individuals must receive the notice. Employers must provide the notice to all employees, whether part-time or full-time. Employers are not required to furnish a separate notice to dependents or other nonemployees who are or may become eligible for coverage under an employer’s plan.
- When the notice must be provided. Employers must provide the notice to all current employees by Oct. 1, 2013. Beginning on that date, employers are also required to provide the notice to newly hired employees within 14 days of their start date.
- How the notice must be distributed. The notice is required to be provided free of charge and may be mailed or provided electronically as long as certain requirements are met.
The DOL has issued two versions of a model notice to employees of their coverage options. One version is for employers who offer a health plan to some or all of their employees and the other is for employers who do not offer a health plan. Employers may rely on the appropriate version of model notice to satisfy the Act’s notice requirement ahead of the Oct. 1, 2013, deadline.
Comment: The model form for employers who do not offer a health plan is confusing. Rather than simply stating that the employer does not offer health coverage to its employees, the form indicates that the recipient of the notice is “not eligible for insurance coverage through this employer,” which seems to imply that other classes of employees might be eligible for coverage.
DOL has also issued an updated model election notice for COBRA healthcare continuation coverage. The updated notice includes information regarding continuation coverage alternatives offered through the Marketplace.
The DOL has indicated that the temporary guidance in the Release will remain in effect until the issuance of regulations or other guidance. Future regulations or other guidance on these issues will provide adequate time to comply with any additional or modified requirements.