|June 10, 2013|
Effective January 1, 2014, individuals may purchase private health insurance on a “Health Insurance Marketplace” (previously referred to as an "Exchange") which are expected to be set up in each state. Open enrollment for coverage through a Marketplace begins on October 1, 2013. By October 1, 2013, all 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 a Marketplace. The Department of Labor has issued Technical Release 2013-02 which describes how employers may satisfy this requirement and provides Model Notices.
Which Employers are Subject to the Notice Requirement?
All 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. In addition, hospitals, nursing homes, institutions that are primarily involved in the care of mentally ill or disabled patients and schools are automatically covered under the FLSA.
What Should the Notice Say?
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.
Who, When and How?
A Notice must be provided to all employees, including part-timers and those who have employer-provided health coverage. A Notice does not have to be provided to dependents or former employees even if they continue to have coverage (for example, through COBRA or retiree benefits).
Employees hired before October 1 must receive the notices by October 1, 2013. New employees hired on or after October 1 must receive the notices within 15 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 worksite and the use of the employer’s electronic information system is an integral part of his job.
The DOL has provided two Model Marketplace Notices - one for employers who do not offer a health plan and the other for employers who offer a health plan to some or all of their employees. Each Model Notice must be adapted to fit each employer but it does not need to be customized for each employee. The notice for employers who provide some health coverage has optional information that would be helpful to employees who want to purchase coverage in a Marketplace. Use of that optional information would require individual customization. Employers may design their own notice.
In addition, the DOL has revised the Model Notice used to inform employees and their dependents that they may continue health coverage through COBRA. The revised COBRA notice informs individuals that they should consider coverage alternatives through the Marketplace and may be eligible for a tax credit if they purchase such coverage.
The DOL Model Marketplace notices can be found at http://www.dol.gov/ebsa/healthreform/; the new revised COBRA notice can be found at http://www.dol.gov/ebsa/cobra.html.
- (a) review and adapt the Model Marketplace Notice including a determination as to whether it is advisable to include optional information; and
- (b) develop a plan to distribute the Notice by the October 1 deadline to all employees (not just participants) either electronically or by mail (or a combination).