Thursday, September 12, 2013

The Modern Workplace: Focus on Benefits

Health Exchange Notice Due to Employees by October 1

We all breathed a huge sigh of relief when the Obama Administration announced that the employer mandate under health care reform would be postponed until 2015.  (Although we can’t help reminding employers that they need to be working toward compliance even now…) Lately we’ve been hearing from employers wondering if they still have to provide exchange notices. Yes! The notice is still required, despite the delay in the employer mandate. Here’s a refresher on what that entails.
What is the exchange notice?

The purpose of the notice is to make sure employees know the exchanges (now called “Health Insurance Marketplaces”) exist, and have a general idea about how exchange coverage differs from employer plan coverage.
Do all employers have to give the notice?

Almost all. Any employer subject to the Fair Labor Standards Act (FLSA) must provide the notice, whether or not the employer provides health coverage. In general, employers with one or more employees involved in interstate commerce are subject to the FLSA.
Does the notice have to go to all employees?
Yes. The notice must be provided to all employees, full-time and part-time, whether or not they are currently enrolled in the employer’s health plan. It does not have to be sent separately to dependents.

When does notice have to be provided?
No later than October 1 of this year for current employees. After that, new employees must receive the notice within 14 days of starting work.

What does the notice have to say?
The notice has to inform employees:

Of the existence of the Health Insurance Marketplace;
Whether or not the employer offers health coverage to employees;

If so, whether the coverage meets minimum value requirements;
That if no coverage is offered, or the coverage doesn’t meet minimum value requirements, a subsidy (premium tax credit) for coverage may be available to the employee;

That if the employee purchases coverage on the exchange, any employer contribution to coverage may be lost; and
That the employer contribution to coverage is excludable from income.

The Department of Labor has provided a model notice.  It includes two different versions—one for employers that offer coverage, and one for employers that don’t. Department of Labor guidance and the model notices are available at  the DOL website. A new COBRA model election notice including information about the Health Insurance Marketplaces has also been issued. It is available at the same website.
Do employers have to use the model notice?

No, but they do need to provide a notice meeting the content requirements above. The model notice for employers offering coverage is three pages long. The third page is an optional part of the notice. It will be helpful for employees, but it is not required.
Can the notice be sent electronically?

Yes, if it meets the Department of Labor Requirements. Generally speaking, if all employees have a computer at their desk, they can be given the notice electronically. If not, some of them may need to receive it in paper form.
Is there a fine or a penalty if I don’t send the notice?
No.  The Department of Labor has said that employers should provide the notice, but there is no fine or penalty for failing to do so.   Because it’s relatively easy to comply using the model notice, we do advise employers to comply.

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