October 1, 2013 Deadline for Notices to Employees of Health Insurance Coverage Options
October 1, 2013 is the official deadline for all employers subject to the Fair Labor Standards Act (“FLSA”) to provide notices to current and new employees of the health insurance coverage options available through the employer and the health insurance exchanges that are being established in each state under the Affordable Care Act. The exchanges or (“the Marketplace”) are scheduled to begin open enrollment for 2014 coverage on October 1, 2013. Between October 1, 2013 and at least January 1, 2014, individuals and small business employees will have access to the Marketplace where they can compare and select from private health insurance options. The Affordable Care Act requires employers to provide a one-time notice of coverage options to employees in advance of the open enrollment period to ensure that individuals have adequate information regarding the Marketplace and the coverage options available to them.
The notice must contain:
- Information describing the Marketplace and how to contact it for assistance
- A description of the eligibility requirements for the tax credit available to certain employees purchasing coverage through the Marketplace
- A statement that purchasing coverage through the Marketplace may cause the employee to lose the employer contribution to his or her employer-sponsored health plan (if any) and that all or a portion of such employer contributions may be excludable from income
The notice requirement applies to all employers that are subject to the FLSA, which includes any employer that has business volume of at least $500,000 annually. It specifically applies to any hospital, school, governmental agency or residential facility that cares for the sick, elderly or disabled. The number of employees has no bearing on an employer’s responsibility to provide the notice.
Employers must provide the notice to all employees, whether part-time or full-time. There is no obligation to provide a separate notice to dependents or other nonemployees who are or may become eligible for coverage under an employer’s plan.
Most importantly, employers must provide the notice to all current employees by October 1, 2013. For new employees, employers have 14 days from the employees start date to provide the notice. Notices can be sent by first-class mail, or electronically if the U.S. Department of Labor’s electronic disclosure safe harbor rules are met (see 29 C.F.R. 2520.104b-1(c) for the rules for disclosing through electronic media). Although the Department of Labor has said that it will not penalize employers for not providing this notice before the deadline, employers should plan to satisfy the notice requirements as soon as possible, e.g., using pay period notices.
The Department provides two model notices employers may rely on that satisfy the FLSA’s notice requirements. Both model notices are available on the Department’s website: www.dol.gov/ebsa/healthreform. One model is for employers who offer a health plan for some or all employees (http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf) and the other model is for employers who do not offer a health plan (http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf). The model notices are in a “fillable” pdf format for ease in completion. The model notices are also available in Spanish and MS Word format at www.dol.gov/ebsa/healthreform.
The new notice rules also effect the notice of election rules for employees who were covered by a group health plan and who may be eligible for continuation of coverage under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). A group health plan must provide these qualified individuals with an election notice within 14 days after the plan administrator receives the notice of a qualifying event, which describes the individual’s rights to continuation coverage and how to make an election. Because some qualified individuals may want to consider and compare health coverage alternatives to COBRA continuation coverage that are now available through the Marketplace, the notice of election has changed. Such qualified individuals are also entitled to notice that they may be eligible for a premium tax credit that could help pay for some or all of the cost of coverage in plans offered through the Marketplace.
Accordingly, the Department offers a model election notice that plans may use to satisfy the requirement to provide the election notice under COBRA that also provides notice of other coverage options available in the Marketplace. The model election notice is available in modifiable, electronic form on the Department’s website at www.dol.gov/ebsa/cobra.html. 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 in good faith compliance with the election notice content requirements of COBRA.
As the implementation of the Affordable Care Act continues, there will be additional changes to implement for employers.
Mellette PC is following legislative and regulatory actions regarding this and other related issues in health reform. If our firm can advise you further on this or other matters, please let Peter Mellette or Harrison Gibbs know.