A key component of the Patient Protection & Affordable Care Act (PPACA) is the creation of new Health Insurance Marketplaces,* which are meant to expand access of affordable coverage to individuals starting next year. Although that timeframe may seem far off to some, in the meantime employers must notify their employees of the various options available through these online portals in a mere two months (October 2013).
This obligation is imposed on ALL employers affected by the Fair Labor Standards Act (FLSA).** In general, the FLSA applies when an employer with one or more employees is engaged in, or produce goods for, interstate commerce. Employers must provide the Notice to each employee, regardless of Plan enrollment status or part-time/full-time employment status, but need not provide a separate Notice to dependents or other individuals who are-or may become-eligible for coverage under the Plan.
The Dept. of Labor (DOL) has issued two Model Notices. One is tailored for employers who provide health coverage for some/all employees (and includes information on whether the coverage meets the minimum value test***), and the other is intended for employers who do not provide health coverage.
While modifications to the Model Notice are permitted, any revised Notice must at minimum inform employees of the following: (a) the existence of the Marketplace; (b) that they may be eligible for a premium tax credit through the Marketplace if the employer plan’s share does not meet a ‘minimum value’ standard or if the employee’s premiums exceed 9.5% of household income; and (c) that if they purchase coverage through the Marketplace (c1) they may lose any employer contribution and (c2) if applicable, the employer’s contribution-and any employee contribution-may be excluded from their income for federal and state tax purposes.
Please note: the Model Notice includes an optional section with information that employers may provide to assist employees in comparing employer coverage versus Marketplace coverage. Any employer who considers providing employees with this optional information should assess the administrative costs of doing so, along with the potential risks of failing to convey this information.
The Notice Requirement was originally scheduled to take effect March 1, 2013, but was delayed to better coincide with the open enrollment period for the Marketplaces. In sum, with respect to current employees, employers are now mandated to provide the Notice by October 1, 2013.**** The good news is that the document may be sent electronically, as long it meets all federal electronic disclosure conditions.
More information will follow, so be on the look-out for additional communication from us right after Labor Day and in late September, as
a reminder.
* Formerly known as “health insurance exchanges.”
** The FLSA also covers hospitals; institutions engaged in the care of the sick, aged, mentally ill, or disabled; 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.
*** An employer-sponsored health plan meets the “minimum value standard” if the plan’s share of the total allowed benefit costs covered by the plan is no less than 60%.
**** Post-October 1, 2013, the Notice must be given to each new employee upon hire. For 2014, it is to be provided within 14 days of the employee’s start date.
