Effective January 1, 2014, individuals may purchase private health insurance in a “Health Insurance Marketplace” (previously referred to as the “Exchange”). Open enrollment for coverage through a Marketplace begins on October 1, 2013. By October 1, 2013, employers subject to the Fair Labor Standards Act (FLSA) must provide a Notice to employees informing them of the option to purchase health insurance coverage in the Marketplace. The Department of Labor has issued Technical Release 2013-02 which describes how employers may satisfy this requirement and provides Model Notices.
Employers, regardless of the number of employees or whether or not they provide health coverage, are required to provide a notice if they are subject to the FSLA. Employers are subject to the FLSA if they have an annual volume of business of $500,000 and have at least one employee. With August upon us, employers should start to develop a plan to distribute the Notice by the October 1st deadline. Below are some details that employers need to know about the Notice.
- The Notice must:
(a) Describe the existence of the Marketplace, the services provided and contact information
(b) Describe the availability of premium tax credits if the employee purchases coverage through a Marketplace if the employer does not offer a plan that provides “Minimum Value” (it is estimated that the vast majority of employers who offer plans will satisfy this “Minimum Value” test) and
(c) Inform employees that if they purchase insurance through a Marketplace, they will lose any employer contribution for employer-provided health insurance and that the employer contribution is generally excludable for federal income tax purposes
- A Notice must be provided to all employees, including part-timers and those who have employer-provided health coverage. The Notice does not have to be provided to dependents or former employees even if they continue to have coverage (i.e. through COBRA or retiree benefits).
- Employees hired before October 1st must receive the Notice by October 1, 2013. New employees hired on or after October 1st must receive the Notice within 14 days of their date of hire.
- Notices may be delivered by first-class mail. They may also be delivered electronically if the employee can effectively access electronic documents at his/her worksite and the use of the employer’s electronic information system is an integral part of his/her job.
Completing the Notice
The DOL has provided two model Notices - one for employers that provide health coverage and one for those who do not. The model Notice has general information about the Marketplaces and whether individuals can receive federal assistance to help them purchase coverage there (Part A). The Notice requires employers to provide general information about the employer, including name, Employer Identification Number (EIN), address, and contact information about health coverage. Several items of information about the employer’s benefit plans must be completed in the form (Part B). These items include:
- Whether all or only some of the employees receive health coverage;
- Whether coverage is offered to dependents and if so, which ones; and
- Whether coverage meets the minimum value (60 percent) standard and is intended to be affordable.
Additional space on the model Notice (questions 13 - 16) includes further optional questions that may be completed by the employer. This information is the same as the questions on the application for Marketplace coverage. We recommend that employers who meet both the minimum value and affordability requirements do not fill out this section as it is optional.
Additionally, it is also our recommendation that it might make sense to include a cover letter that puts the Notice in context. For example, employers may want to make it clear that this Notice is required by law, and that employees covered by the group health plan do not need to enroll in the Marketplace. Employers may also want to inform employees that if they purchase insurance through a Marketplace, they will lose any employer contribution for employer-provided health insurance, and those premiums they pay for Marketplace coverage will be on an after-tax basis.
OneDigital is happy to answer any questions that you may have regarding this information. Feel free to contact us directly by calling 800-364-7575 or email us at email@example.com.
As with all issues involving the interpretation or application of laws and regulations, it is recommended that clients consult their legal counsel for advice on the interpretation and application of the Affordable Care Act.