October 1st Deadline Approaching: Employers Must Provide Notice to Employees of Health Insurance Exchange Options
While there has been much publicity about the delays in implementing certain features of the new Patient Protection and Affordable Care Act (ACA), there is one rapidly approaching deadline that no employer should ignore. Employers must provide their current employees with a health insurance exchange notice no later than October 1, 2013. This applies to all employers engaged in interstate commerce or with at least $500,000 of sales per year, regardless of whether or not an employer offers its employees health care coverage.
Under ACA, each state is required to have a state-, federal- or jointly-run online health insurance exchange. These exchanges will serve as health insurance marketplaces where individuals and small businesses may purchase health plans if there is no employer-sponsored health plan or if the employer-sponsored health plan is unaffordable or fails to offer essential health benefits. The exchanges will open for enrollment by October 1, 2013 for coverage starting January 1, 2014.
The health insurance exchange notice must provide employees with information necessary to make informed decisions about their health insurance. The notice must explain what the web-based exchange is; include information about the premium subsidies that may be available if an employer's plan is unaffordable or does not provide minimum value; and explain the consequences if an employee decides to purchase a qualified health plan through the exchange instead of employer-sponsored coverage. (The notice does not, however, need to explain what insurance options may be available online.) The notice may be distributed electronically or via hard copy, and while there is no requirement to obtain an employee’s signature, employers may want to track delivery and receipt of the notice. Additionally, after October 1, 2013 employers are required to provide notices to new hires within 14 days after the date of hire.
The United States Department of Labor has issued two model exchange notices: one for employers who do not offer a health plan and one for employers who do. Part B of the model notices requires the employer to enter certain information before use, including name, Employer Identification Number (EIN) and address and (for employers who do provide coverage) contact information about health coverage, whether all or only some employees receive health coverage, whether coverage is offered to dependents and if so, which ones, whether coverage meets the minimum value (60 percent) standard and whether the cost of coverage is intended to be affordable.
These model notices can be accessed at:
http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf (for employers with plans) and
http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf (for employers without plans)
Notices are also available in Spanish at:
http://www.dol.gov/ebsa/pdf/FLSAwithplanssp.pdf (for employers with plans) and
http://www.dol.gov/ebsa/pdf/FLSAwithoutplanssp.pdf (for employers without plans)
For some time, it had not been clear what penalties an employer would suffer if it delays issuing a notice past October 1, 2013. However, in a notice issued only a few days ago the Department of Labor stated that there would be no fine or penalty.
With two weeks remaining before the first major deadline of the nation’s health care law, employers may face many questions about the notices and the information they are required to provide.