October 1, 2013, is a huge day for the Affordable Care Act (ACA) as open enrollment will begin for the new health insurance Marketplaces, also called Exchanges.
At that time, the ACA will require employers to provide employees with a written notice informing them about the new Marketplaces. As an employer, here’s what you need to know to stay compliant with this requirement.
How did we get here?
In May of 2013, the Department of Labor (DOL) released Technical Release 2013-02 to provide temporary guidance on the requirement to provide employees with a notice about the Exchanges. The name the DOL uses for the Exchange Notice is the “Notice to Employees of Coverage Options.”
In connection with the temporary guidance, the DOL announced the availability of Model Notices to Employees of Coverage Options for employers to use to satisfy the ACA’s Exchange Notice requirement.
The DOL also set a compliance deadline for the Exchange Notices. Employers must provide employees with an Exchange Notice by Oct. 1, 2013. In addition, the DOL’s temporary guidance includes a new COBRA model election notice, which has been updated to include information regarding health coverage alternatives offered through the Exchanges.
Which employers are required to distribute the Exchange Notice to their employees?
Any and all employers who are subject to the Fair Labor Standards Act (FLSA) are required to distribute the notice to their employees.
Should all of my employees receive the Exchange Notice?
Employers must provide the Exchange Notice to each employee, regardless of plan enrollment status or of part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees. Whether you offer benefits to your employees or not, you’re still required to distribute the Exchange Notice to your employees.
What content needs to be in the Exchange Notice?
- Include information regarding the existence of an Exchange, as well as contact information and a description of the services provided by an Exchange;
- Inform the employee that the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Exchange; and
- Contain a statement informing the employee that, if the employee purchases a qualified health plan through the Exchange, the employee 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 there a template?
The DOL provided the following model Exchange Notices:
- A Model Notice to Employees of Coverage Options for employers who do not offer a health plan; and
- A Model Notice to Employees of Coverage Options for employers who offer a health plan to some or all employees.
In addition to the required content, the DOL’s model notice for employers who offer a health plan includes information regarding the employer’s current health plan coverage. This information is included to help individuals enroll in coverage through the Exchanges and determine their eligibility for federal subsidies. Employers are not required to provide this information, although including it in the notice may help reduce the number of employee questions on whether the employer’s health plan is affordable and provides minimum value.
Employers may use one of the above models, as applicable, or a modified version, provided the notice meets the content requirements described above. Thus, employers may use the DOL’s models “as is,” customize the DOL’s models or create their own Exchange Notices, as long as the notices contain the required content elements.
We’re also including a link at the bottom of this post to download a complimentary cover letter template to explain to your employees what the exchange notice is and what it means to them.
How should I distribute the Exchange Notice to my employees?
The notice is required to be provided automatically, free of charge. The notice must be provided in writing in a manner calculated to be understood by the average employee; however, no particular method of providing the notice is specifically required (for example, by mail, hand delivery or electronically). The DOL has stated that the notice may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the DOL’s electronic disclosure safe harbor are met. This safe harbor allows plan administrators to send certain disclosures electronically to:
- Employees with work-related computer access; and
- Other plan participants and beneficiaries who consent to receive disclosures electronically.
The safe harbor does not require the use of any specific form of electronic media. However, plan administrators are required to use measures reasonably calculated to ensure actual receipt of the material by plan participants and beneficiaries. Merely placing a disclosure on a company website available to employees will NOT by itself satisfy this disclosure requirement.
What about my COBRA eligible employees?
According to the DOL, some qualified beneficiaries may want to consider and compare health coverage alternatives to COBRA continuation coverage that are available through the Exchanges. Qualified beneficiaries may also be eligible for a premium tax credit for an Exchange plan. The DOL updated the model COBRA election notice to help make qualified beneficiaries aware of other coverage options available in the Exchanges. Use of the model election notice, appropriately completed, will be considered by the DOL to be good faith compliance with the election notice content requirements of COBRA.
What’s the deadline to distribute the Exchange Notice?
Employers must provide the Exchange Notice to both new hires and current employees as follows:
- New Hires—Employers must provide the notice to each new employee at the time of hiring beginning Oct. 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.
- Current Employees—With respect to employees who are current employees before Oct. 1, 2013, employers are required to provide the notice no later than Oct. 1, 2013.
Mark Bailey, Jr. is the Senior Marketing Manager of NFP's Atlantic region. Before joining the company, Mark was a production assistant on the tv show Glee and an on-air talent on 95.1 WAPE. He has over 10 years of experience in the insurance and corporate benefits space. Mark is an avid Jacksonville Jaguars fan and loves to spend his free time building custom mechanical keyboards.