This blog post was authored by Heather DeBlanc
The Affordable Care Act requires employers to provide Notice to its employees that they may receive health coverage through the exchange (a.k.a. “Health Insurance Marketplace” or “Marketplace”). California’s exchange is called Covered California.
When Must Employer Provide Notice? An employer must provide the Notice to current employees before October 1, 2013. Beginning October 1, 2013, the employer must provide this Notice to new employees at the time of hiring (i.e. within 14 days of an employee’s start date).
Who Must Provide Notice? The requirement applies to all employers who are subject to the Fair Labor Standards Act (“FLSA”). See www.dol.gov/elaws/esa/flsa/scope/screen24.asp. Unlike the Affordable Care Act’s shared responsibility provision, this notice requirement is not limited to large employers who employed an average of 50 or more full-time employees during the previous calendar year.
Who Must Receive the Notice? All employees (as that term is defined by the FLSA) must receive the Notice. The FLSA uses the “economic reality” test to determine employee status. See http://www.dol.gov/whd/regs/compliance/whdfs13.htm. The Notice must be provided to all employees regardless of whether the employee is enrolled in, or eligible for coverage, or of part-time or full-time status. Employers are not required to provide a separate notice to dependents.
What Content Is Required For The Notice? The notice to employees must:
- Inform employees of the existence of the Marketplace, including a description of the services provided by the Marketplace, and the manner in which employees may contact the Marketplace to request assistance;
- Inform employees that if the employer’s plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, they may be eligible for a premium tax credit under section 36B of the Internal Revenue Code if the employee purchases a qualified health plan through the Marketplace; and
- Inform employees that if they purchase a qualified health plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
Is A Model Notice Available? Yes. The Department of Labor (DOL) also released three model notices: (1) one for employers who offer a health plan to some or all employees, (2) one for employers who do not offer a health plan, and (3) a COBRA model election notice. The model notices are available on the DOL’s Affordable Care Act web page at the following link: http://www.dol.gov/ebsa/healthreform/index.html.
On September 11, 2013, the DOL announced that employers will not be fined or penalized for failing to provide the Notice. See http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html. Employers may find further information at the following link: http://www.dol.gov/ebsa/newsroom/tr13-02.html.