Are employers that donít provide health insurance required to send exchange notices?


Issue:

Your company does not offer health insurance coverage. Does it need to provide notice to employees about the health insurance exchanges created under the health reform law?

Answer:    

If your company is covered by the Fair Labor Standards Act (FLSA), it does. The Patient Protection and Affordable Care Act (ACA) requires employers subject to the FLSA to produce and distribute notices to employees about the health insurance exchanges (also known as marketplaces).

These notices were originally required to be distributed by March 1, 2013. But in January 2013, the Department of Labor (DOL) delayed this requirement until it had time to issue further guidance. On May 8, 2013, the DOL issued Technical Release 2013-02, which specifies that the notices now must be provided by October 1, 2013. That is the date that open enrollment begins for the exchanges, which become effective in January 2014.

Who must receive the notice? All employees must receive the notice, regardless of whether they are eligible to participate in the health plan and regardless of whether they are enrolled in the plan. However, separate notices are not required to be sent to dependents or former employees, even if they are still covered by or eligible for coverage under the plan (e.g., they are covered under COBRA or have retiree coverage).

What must be in the notice? The notice must:

    1. inform the employee of the existence of an exchange, including a description of the services provided by such exchange, and the manner in which the employee may contact the exchange to request assistance;

    2. if the employer planís share of the total allowed costs of benefits provided under the plan is less than 60 percent, inform the employee that he or she may be eligible for a premium tax credit under Internal Revenue Code Sec. 36B and a cost sharing reduction under ACA Sec. 1402 if the employee purchases a qualified health plan through the exchange; and

    3. inform the employee that, if he or she purchases a qualified health plan through the exchange, 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.

Model notices available. Along with Technical Release 2013-02, the DOL issued two model notices for employers to use. One model notice is for employers that currently offer coverage to some or all employees (available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf). The second model notice is for employers that currently do not offer coverage (http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf).

Source: EBSA Technical Release 2013-02, May 8, 2013.

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