On May 8, 2013, the Department of Labor (DOL) issued Technical Release 2013-02 which provides temporary guidance for employers regarding the requirement to notify employees of coverage options available through Exchanges, also called Health Insurance Marketplaces.
This Model Notice to Employees of Coverage Options is available for employers to use today if they wish. Employers must provide notice to current employees by Oct. 1, 2013. There are two model notices. Both forms require the employer to enter specific information before distributing to employees.
Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements. The notice must be provided in writing in a manner understood by the average employee. The notice may be provided to employees by first-class mail or electronically if in accordance with the DOL regulations.
In January, the DOL delayed the deadline for employers to notify employees of the availability of Exchanges from March 1, 2013, to late summer or early fall of 2013. The DOL issued this temporary guidance and model notice in advance of the expected timeframe because it received several requests from employers for a model notice on an earlier timeframe. Employers are not required to use this temporary guidance and may wait until final guidance is issued later this year.
Providing notice of coverage options is an employer obligation. Employers may want to use the Minimum Value Calculator posted on The Center for Consumer Information & Insurance Oversight website to determine if their plan meets the minimum value requirements.
Who Must Receive the Notice?
Employers that are subject to the Fair Labor Standards Act (FLSA), regardless of size, funding type or if they offer health coverage today or not, must provide a notice of coverage options to each employee. Employees must receive the notice whether or not they are enrolled in a health plan today or if they are part-time or full-time. 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.
What Must the Notice Include?
The notice to inform employees of coverage options must include information regarding the existence of an Exchange as well as contact information and description of the services it provides. The notice must include:
- Information regarding the existence of the Exchanges as well as contact information and description of the services provided by an Exchange;
- A statement informing the employee that if the employee purchases a qualified health plan through the Exchange, the employee may lose the employer contribution (if any) to any health benefits plans offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes ; and
- If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Exchange.
What is the Deadline that Employers Must Issue the Notice to Employees?
Current employees must receive the notice before Oct. 1, 2013. The notice is required to be provided automatically, free of charge. Employers are required to provide the notice to each new employee at the time of hiring beginning Oct. 1, 2013. For 2014, the DOL will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.
Model COBRA Election Notice Available
- Some qualified beneficiaries may want to consider and compare health coverage alternatives to COBRA continuation coverage that are available through the Exchange as they may also be eligible for a premium tax credit. Therefore, the DOL has revised the COBRA model election notice to help make qualified beneficiaries aware of other coverage options available in the Exchanges.
- The notice also includes a new notation that plans may no longer impose any pre-existing condition exclusions beginning in 2014 pursuant to the ACA, and not just those tied to covered individuals under the age of 19.
The model COBRA election notice is available in modifiable, electronic form:
For more information, visit the DOL website.