Exchange Notices Due to All Employees by 10/1/2013
Employers keeping up with key dates under the Affordable Care Act have been busy preparing the Exchange Notices due to employees by October 1, 2013 and then ensuring a process to provide it to each new employee within 14 days of their hire date. However, since the news that employers will not be fined for failure to provide the Notices, we’ve had questions about whether issuing the Notices is necessary.
We recommend employers do provide the Notices since they are technically required and it is important to ensure employees know of their rights to the Exchange (or Marketplace). In addition, the duty to provide the Notices likely falls within the scope of ERISA obligations for employers, and a failure to notify employees could give rise to a claim from an employee who incurred harm (such as uncovered claims).
Who is Required to Provide Notices?
The Notice requirement applies to any employer subject to the Fair Labor Standards Act (FLSA):
- The Act applies to enterprises with employees who engage in interstate commerce, produce goods for interstate commerce, or handle, sell, or work on goods or materials that have been moved in or produced for interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies.
- However, the Act does cover the following regardless of their dollar volume of business: hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state, and local government agencies.
- Employees of firms that do not meet the $500,000 annual dollar volume test may be covered in any workweek when they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods.
Which Employees Must Receive the Notice?
The Notice must be provided to every employee, regardless of status (full or part-time, seasonal or temporary) and regardless of coverage eligibility or participation. In other words, all of your employees should be provided with the Notice.
What Does the Notice Need to Include?
Notices must inform the employee:
- Of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
- If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code), if the employee purchases a qualified health plan through the Marketplace; and
- If the employee purchases a qualified health plan 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 Department of Labor (DOL) has provided Model Marketplace Notices for employers, providing separate Models for employers who do not provide a health plan and another for those that do. The COBRA model election notice has been updated to inform qualified beneficiaries of the alternative coverage options available through the Exchanges.
Can You Include Other Information with the Notice?
Since the Notice is likely to create questions from employees, particularly how to find their states’ Exchange, YPP included information with the Notices about each employees’ own state Exchange. For example, all California employees received information about Covered California, so they know the website location and where to find the subsidy calculator. We also ensured they had information about their current plan and rates. While this is not required, it helps guide employees to information they need, and minimizes follow-up questions.
The purpose of the Notice is to ensure employees have information about the Exchange, and the Notice – while viewed as an added HR burden – can be an effective means of communicating that information to employees.