AFFORDABLE CARE ACT UPDATE
October 1 Deadline for Employers to Provide Exchange Notices
Under the Patient Protection and Affordable Care Act (PPACA), the newly created Health Insurance Marketplace (the Exchanges) begins enrollment on October 1, 2013. All employers subject to the Fair Labor Standards Act (see below for affected entities) are required to distribute a notice of coverage options (Exchange Notice) to their employees no later than this date. After the October 1 deadline, employers must distribute the notice to all new employees within 14 days of hire.
Employers Subject to the Requirement
Affected entities include hospitals, schools, certain residential institutions (such as for the sick, the aged, etc.) and government agencies, as well as any employer that is engaged in interstate commerce or an employer with at least $500,000 of business per year. Thus, almost every employer must provide Exchange Notices to their employees.
The written notice provided by employers must include the following:
- Information regarding the existence of the Exchanges, including a description of the services provided and contact information for additional assistance.
- Information that the employee may be eligible for a tax credit on their insurance premiums if the employer does not provide qualifying health insurance and the employee purchases a qualified health plan through the Exchanges.
- Information that the employee may lose any employer contribution to an employer-sponsored health benefits plan if the employee purchases a qualified health plan through the Exchanges and that the employer contribution may be fully or partially excludable from income for federal income tax purposes.
Timing and Distribution of Notices
Employers must provide Exchange Notices to all current employees no later than October 1, 2013.
Employers must also provide Exchange Notices to each new employee on their date of hire beginning October 1, 2013. For 2014, the DOL will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee's start date.
The Exchange Notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail or electronically (provided the requirements of the Department of Labor's electronic disclosure safe harbor are met). Additionally, the notice must be provided automatically and free of charge.
The Department of Labor (DOL) has issued two model Exchange Notices that may be used by employers. One notice should be used by employers who offer employer-sponsored health insurance to some or all of their employees and the other should be used by employers who do not offer coverage. The model notices can be found on the DOL website under the section entitled "Notice to Employees of Coverage Options." The site also provides a detailed guide related to the Exchange Notices. Access the guide by clicking here.
The Final Word
Employers should work with their insurance provider (and legal counsel, if necessary) to complete their Exchange Notice and distribute as soon as possible to employees to meet the October 1, 2013 distribution deadline. After the deadline, the notices should be provided in new hire materials and provided to new employees within 14 days of their employment start dates.