The Patient Protection and Affordable Care Act (“Health Care Reform”) created section 18B of the Fair Labor Standards Act (FLSA)1 requiring employers to notify employees of health insurance options available through the Marketplace (also called the “Exchange”). The Department of Labor (DOL) recently issued two versions of a model notice and clarified that employers must provide the notice to employees by October 1, 2013, in time to coincide with the open enrollment period for the Exchange.2 Employers should review the model notice and prepare to distribute a notice to their employees.
The DOL provided two versions of the model notice. One version of the model notice is for employers with a group health plan. The other version, which is shorter, is for employers who do not offer health coverage. The version for employers with health plans is available here.
The version for employers without health plans is available here.
Initial distribution of the notice must occur by October 1, 2013. Thereafter, the notice must be provided to new hires at the time of hire which, for 2014, means within 14 days of the date of hire. (Although the DOL guidance is not clear, presumably the 14-day period would also apply for new hires after October 1, 2013.) Employers must provide the notice in writing to all employees regardless of plan enrollment status or part-time or full-time status. Notice may be provided electronically if the DOL’s electronic safe harbor requirements are met.3 Notice may also be sent via first class mail.
The notice must provide basic information about the Exchange, including services provided and contact information, as well as general eligibility information for premium tax credits. The notice must also inform employees that if they purchase a health plan through the Exchange, they may lose employer contributions, which can be excluded from income for Federal income tax purposes. For employers who offer a health plan to employees, the model form requires employers to provide plan specific information regarding general eligibility for employer-sponsored plans, dependent coverage and information on whether the employer plan meets the minimum value and affordability standards. In addition, there is an optional section which outlines details of the individual employee’s eligibility for the employer-sponsored plan, whether that plan meets the minimum value standard, the premium that the employee is expected to contribute as well as any anticipated changes the employer will make to the plan in the new plan year.
Please contact any of the attorneys in the Dorsey & Whitney Benefits and Compensation department if you have questions.
Summer Associate Lindsay Docto provided significant assistance in the creation of this article.
1 29 U.S.C. § 218B (2012)
2 See DOL Technical Release No. 2013-2 (May 8, 2013), available at http://www.dol.gov/ebsa/newsroom/tr13-02.html
3 For safe harbor guidelines, see 29 C.F.R. § 2520.104b-1(c); see also, DOL Technical Release No. 2011-03 (Sept. 13, 2011), available at http://www.dol.gov/ebsa/newsroom/tr11-03.html