On October 1, 2013, public health insurance marketplaces are scheduled to go "live," as mandated by the Patient Protection and Affordable Care Act of 2010. By that date, employers are required to provide notice to employees explaining their options available under the health care act. Here are answers to questions that employers are asking about the notice requirement.
What information must be included in the notice?
The written notice must:
- Inform employees of the existence of health insurance marketplaces and include a description of the services they provide and how employees can contact a marketplace to request assistance.
- If the employer plan's share of the total allowed cost of benefits provided under the plan is less than 60% of such costs, inform the employee that he or she may be eligible for a premium federal tax credit if the employee purchases a qualified health plan through a marketplace.
- Inform the employee that, if he or she purchases a qualified health plan through a marketplace, he or she may lose the employer contribution (if any) to any health benefits plan offered by the employer. In addition, all or a portion of such contribution may be excludable from income for federal income tax purposes.
Which employers must send the notice?
The notice requirement must be met by employers that are required to comply with the Fair Labor Standards Act ("FLSA"). In general, the FLSA applies to employers with one or more employees who are engaged in, or produce goods for, interstate commerce. For most companies, a test of not less than $500,000 in annual dollar volume of business applies.
The FLSA also specifically covers the following: hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies.
Is there a fine if an employer doesn't send the notice?
According to the Department of Labor ("DOL"), there is "no fine or penalty under the law" for failing to provide the notice. However, the health care act is intertwined with other laws (this particular provision is embedded in the FLSA in a new section, 8A), so it's a good idea to comply to avoid possible legal complications.
Who should receive the notice?
Notice must be given to all employees, whether or not they work full-time, and regardless of whether they're currently receiving health benefits. By October 1, you must provide notice to all employees. After October 1, notice must be given to new employees within two weeks of their hire dates.
How should employers send the notice?
The notice must "be provided in writing in a manner calculated to be understood by the average employee," according to the DOL. It can be sent by first-class mail and can also be provided via e-mail, but only if employees access e-mail as an "integral part" of their duties and can access the messages easily.
Is there a standard notice that employers can use?
The DOL has issued a pair of model notices you can use (but they aren't required):
- For employers that currently offer health benefits: http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
- For employers that don't offer health benefits: http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf
Part B of the forms includes information employees will need if they plan to purchase coverage through a marketplace, assuming they're eligible.
The Part B information is needed by employees who apply to their state's marketplace (or the federal version, if no state-run marketplace exists). Employees must complete a required questionnaire to determine their eligibility.
In Part B of the model notice for employers that currently offer health coverage, there are several blank spaces requesting information about the health plan. Because the law doesn't actually require you to provide the information, and because some of the information may be difficult to obtain, some legal advisors say that employers may decide to disregard some or all of Part B, especially if the information is uncertain or likely to change.
Can another party send the notices on behalf of an employer?
The DOL states on its website that an employer can satisfy its obligation to provide notice if another party, such as a third-party administrator or multiemployer plan, sends out notices on its behalf.
With the October 1 deadline right around the corner, employers may be scrambling to satisfy the health care act's requirement to notify employees of their health care options. If you have additional questions about what information needs to be included in the notice, please give us a call.
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