
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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