Employee Notices About Patient Protection and Affordable Care Act (PPACA) Insurance Exchanges - Guidance Issued
One of the 2013 action items for employers under the Patient Protection and Affordable Care Act (PPACA) is the production and distribution of a notice to employees about the health insurance exchanges that will become effective in 2014. Under the statute, these notices were originally required to be distributed by March 1, 2013. However, in January 2013, the U.S. Department of Labor (DOL) delayed this distribution requirement until it had an opportunity to issue further guidance. On May 8, 2013, the DOL issued that guidance in the form of Technical Release 2013-02 and a model notice published on the DOL's website. The DOL describes the insurance exchanges as "Marketplaces," a term we will use in this alert.
Employers Subject to the Marketplace Notice Requirement
The Marketplace Notice requirement applies to all employers covered by the Fair Labor Standards Act. This includes virtually all private sector employers and certain public sector employers as well. The requirement applies regardless of the number of employees and regardless of whether or not the employer offers health insurance coverage to its employees.
Who Must Receive the Marketplace Notice?
Employees: All employees must receive the Marketplace Notice, regardless of whether they are eligible to participate in the health plan and regardless of whether they are enrolled in the plan.
Dependents: Separate Marketplace Notices are not required to be sent to dependents.
Former Employees: Marketplace Notices are not required to be sent to former employees, regardless of whether they are still covered by or eligible for coverage under the plan (e.g., pursuant to COBRA or retiree coverage).
Content of the Marketplace Notice
The statute requires that Marketplace Notices address the following items:
The existence of the Marketplace, a description of services provided by the Marketplace and contact information for the Marketplace.
Information about whether the employer-sponsored plan covers at least 60% of allowable claims and related information about premium tax credits that the employee may be eligible to receive if he or she purchases qualifying health coverage through the Marketplace.
A statement that if the employee purchases health coverage through the Marketplace, he or she may lose the tax-free contributions from the employer (if any) toward coverage offered through the employer's plan.
The model Marketplace Notice addresses each of the above items. It also provides information about the plan sponsor that may be used by an employee who is shopping for coverage in the Marketplace, and it provides information to the employee about the plan's eligibility rules.
With regard to the information about affordability, the model Marketplace Notice describes affordability in terms of whether the cost of coverage exceeds 9.5% of the employee's wages from the employer, not the statutory threshold of 9.5% of the employee's household income.
The model notice contains certain optional provisions on its last page that are intended to help ensure that employees understand their coverage options, but will require the notice to be customized for different groups of employees (primarily new hires versus longer service employees). As a result, these optional provisions may not be practical at larger employers.
When Must the Marketplace Notice Be Delivered?
Current Employees: Employees who are on the payroll on or before September 30, 2013 must receive the notice by October 1, 2013.
New Employees: New employees hired on or after October 1, 2013 must be provided with a copy of the Marketplace Notice within 14 days of the date of hire. This 14 day period is in effect from October 1, 2013 through 2014 and may be changed in the future.
How to Deliver the Marketplace Notice
Mail: The Marketplace Notice may be delivered by first-class mail.
Electronic Delivery: As with other employee communications, such as Summary Annual Reports, Safe Harbor Notices, etc., the Marketplace Notice may be delivered by e-mail to those employees who have regular access to e-mail if the employer complies with the DOL's electronic delivery guidance.
Use of the Model Marketplace Notice is intended to simplify employer compliance with the Marketplace Notice requirement, but the model notice must be customized to some extent. Attention should be paid early to the following items:
Ensuring that all employees (not just participants) can receive this notice in a timely manner by mail, e-mail, or a combination of the two.
Describing the health plan's eligibility rules in Part B of the notice.
Determining if the box in Part B of the notice relating to satisfying the 60% minimum value standard and the 9.5% affordability standard may be checked or if different notices will be required for different groups of employees.