- DOL Guidance on October 1, 2013 Deadline for Providing Health Insurance Marketplace Notice to Employees and Updated Model COBRA Notice
- May 21, 2013 | Author: Andy DeClercq
- Law Firm: Boardman & Clark LLP - Madison Office
On May 8, 2013, the Department of Labor (DOL) issued guidance regarding a required notice that employers must provide employees with information regarding the new Health Insurance Marketplace (also referred to as the Health Insurance Exchange) that will be available beginning January 1, 2014. The Health Insurance Marketplace is one of the most-prominent aspects of the Patient Protection and Affordable Care Act. It is designed to provide individuals and employees of small businesses with access to affordable coverage through a competitive private health insurance market. In addition, certain qualifying individuals will be eligible for premium tax credits to assist in the purchase of coverage through the Marketplace.
The required notice must provide employees with specific information regarding the Health Insurance Marketplace. It must:
- Inform the employee of the existence of the Marketplace, including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
- Provide information regarding eligibility for a premium tax credit if the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs; and
- Notify the employee that if coverage is purchased through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
The notice requirement applies to any employer that is covered by the Fair Labor Standards Act (FLSA), whether or not the employer offers a health plan to its employees. The notice is required to be provided to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.
The DOL has provided two model notices to help employers meet the notice requirement:
- Model notice for employers who offer a health plan to some or all employees, available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf.
- Model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf.
The deadline for complying with the notice requirements is October 1, 2013. (Originally, the deadline was scheduled to be March 1, 2013, but the effective date was delayed to provide employers with additional time for compliance.) This compliance deadline corresponds with the beginning of the open enrollment period for the Health Insurance Marketplace, which is also October 1, 2013. With respect to when the employers are required to provide the notice:
- For employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013.
- For employees hired on or after October 1, 2013, the notice must be provided at the time of hire.
For 2014, the DOL will consider the notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. The notice is required to be provided:
- Automatically, free of charge;
- In writing in a manner calculated to be understood by the average employee; and
- In a way that is likely to result in full distribution, such as in-hand delivery or first-class mail.
The notice may be provided electronically if the requirements of the DOL’s electronic disclosure safe harbor are met (see 29 CFR 2520.104b-1(c)). Regardless of the delivery method, employers should adequately document their compliance with notice requirement.
Updated COBRA Notice
The DOL also has issued an updated model COBRA election notice that includes new provisions regarding the Health Insurance Marketplace. Although COBRA requirements will continue even after the Health Insurance Marketplace is established, it is possible that individuals who qualify for coverage under COBRA may want to seek coverage through the Marketplace. For example, an individual who qualifies for a premium tax credit may prefer to seek coverage through the Marketplace. The purpose of the revised model COBRA notices, therefore, is to make COBRA qualified beneficiaries aware of other coverage options available in the Marketplace.
As with the earlier model, in order to use this model election notice properly, the plan administrator must complete it by filling in the blanks with the appropriate plan information. Use of the model election notice, appropriately completed, will be considered by the Department of Labor to be good faith compliance with the election notice content requirements of COBRA. The new COBRA model election notice is available here: http://www.dol.gov/ebsa/modelelectionnotice.doc.
A redline version of the new notice (showing the new changes) is also available: http://www.dol.gov/ebsa/modelelectionnoticeredline.doc. If your plan has its own custom COBRA election notice, this redline version may assist in updating that custom document. (Many plans choose to start with the DOL’s model, then customize it to address plan specific details or to clarify certain items not addressed in detail in the model.) These updates are not mandated by the DOL’s new guidance, but making the changes is still advisable to keep custom notices consistent with the contents of the DOL model.