Pundits have written much about the Affordable Care Act’s forthcoming Health Insurance Exchanges, but they have paid little attention to employers’ obligations to notify employees of those Exchanges. The state-based Exchanges, also known as the Health Insurance Marketplace, are expected to go into effect on January 1, 2014, with open enrollment beginning on October 1, 2013. Employees may purchase health insurance through these Exchanges.
No later than October 1, 2013, employers covered by the Fair Labor Standards Act must issue written notification to employees advising them of the existence of and benefits available through the Exchanges. When it enacted the Affordable Care Act, Congress tucked the notice-of-Exchanges section into the FLSA, a law best-known for its minimum and overtime wage requirements, as well as its child labor restrictions. But the Act’s seemingly haphazard placement into the U.S. Code does not diminish the effect: Washington is imposing yet another mandate on businesses.
The Department of Labor’s Employee Benefits Security Administration issued technical guidance in early May 2013 to assist employers in complying with this statutory notice requirement. The guidance includes references to model notices. One model is recommended for employers who do not offer a health plan, and another model is recommended for employers who offer a health plan to some or all employees. (If using a model, only Part A is required for distribution; Part B is optional.)
The notice must inform employees of the Exchanges’ existence, describe the services provided by the Exchanges, and identify the manner in which the employee may contact an Exchange for assistance. The notice also must inform employees that they may be eligible for a premium tax credit if they purchase coverage through an Exchange. Finally, the notice must inform employees that by purchasing such coverage, they may lose the employer contribution (if any) for any employer health coverage for which they are otherwise eligible, and that such an employer contribution may be excludable from federal income tax.
Employers must provide individualized notice to all employees, regardless of whether they are part-time or full-time, or whether they are eligible for any employer health plan. Employers must provide the notice to all current employees by no later than October 1, 2013. For those hired after that date, employers must provide the notice within 14 days of the hire date. Inclusion within “new hire” paperwork is recommended.
There is no codified penalty for non-compliance at this time. The Department of Labor has not yet promulgated regulations related to Exchange notices.