Recent guidance clarifies the exchange notice requirement and the 90-day waiting period limitation under the Affordable Care Act.
The U.S. Departments of Labor (DOL), Health and Human Services, and the Treasury (the Departments) issued Frequently Asked Questions (FAQs) on September 4, 2013, and September 11, 2013, clarifying the exchange notice requirement and the 90-day waiting period limitation under the Affordable Care Act (ACA).
Exchange Notice Requirement
The ACA requires employers to furnish employees with a written notice providing information about the health insurance exchanges, the premium tax credit (if applicable) and the impact of choosing coverage through the exchanges rather than through the employer. On May 8, 2013, the DOL published guidance regarding this notice requirement, including model notices for employers (as described in “Notice of Coverage Options Available Through the Exchanges”.
The September 4, 2013, FAQ clarifies that an employer will satisfy its notice obligation if a complete and timely notice is distributed by another entity (such as an insurance issuer, multiemployer plan or third-party administrator) on behalf of the employer. However, the FAQ emphasizes that this notice must be provided to all employees regardless of eligibility for employer coverage or enrollment in a plan. Thus, the employer’s notice obligation will not be satisfied if another entity provides notice only to a subset of employees, such as current plan participants, unless the employer notifies all other employees. The FAQ also notes that entities providing notice on behalf of an employer to a limited segment of employees should advise the employer of the employer’s remaining obligation with respect to the other employees not being provided the notice by the outside entity.
The September 11, 2013, FAQ confirms that the notice should be provided to employees by October 1, 2013, but notes that there is no fine or penalty under the law for failing to do so.
Prohibition on Waiting Periods that Exceed 90 Days
The ACA prohibits waiting periods in excess of 90 days for group health plan coverage for plan years beginning on or after January 1, 2014. On March 8, 2013, the Departments issued proposed regulations effective through the end of 2014 implementing the 90-day waiting period limitation (as described in “ACA Guidance on 90-Day Waiting Periods and Certificates of Creditable Coverage”. The proposed regulations addressed a number of topics related to the limitation, including the ability to impose substantive eligibility requirements not based solely on the lapse of time if not designed to avoid compliance with the 90-day waiting period limitation. The September 4, 2013, FAQ confirms that the March 8, 2013, proposed rules can be relied upon through 2014 and states that any subsequent guidance will not be effective prior to January 1, 2015. In addition, the FAQ sets forth an example of a substantive eligibility requirement that would be permissible under the proposed rules. The example given is that a multiemployer plan operating pursuant to an arms-length collective bargaining agreement that has an eligibility provision allowing employees to become eligible for coverage by working hours of covered employment across multiple contributing employers would be considered by the Departments to be designed to accommodate a unique operating structure and not to avoid compliance with the 90-day waiting period limitation.