HolmstromKennedy

Employer Notice Requirement: Health Insurance Marketplace Notice

By: Maryjo F. Pirages Reynolds

The Patient Protection and Affordable Care Act, more commonly known as “Obamacare”, added a section to the Fair Labor Standards Act that, beginning October 1, 2013, will require employers to provide employees with special notice of health insurance coverage options. What does this mean for employers? It means employers need to consider the following:

Does the Fair Labor Standards Act apply?

Most likely the answer is ‘yes.’ The Fair Labor Standards Act (FLSA) applies to the following employers:

  • Employers who have an annual dollar volume of business or sales of at least $500,000.00;
  • All schools, government agencies, hospitals, and medical or nursing care providers;
  • Employers involved in commerce between the States and/or in the production of goods for commerce (this is interpreted quite broadly); and
  • All domestic service workers.

To whom does the employer need to provide this notice?

All employees, regardless of whether the employee is part-time or full-time. Employers must provide notice of the aforementioned to employees regardless of whether or not the employee is enrolled in an employer’s health plan. Notably, employers are not required to provide notice to an employee’s spouse, partner, or dependent(s).

When does this notice requirement begin?

For new employees: If an employee is hired on or after October 1, 2013, he or she must be provided with this notice within 14 days of his or her start date.

For current employees: Current employees must be provided with this notice no later than October 1, 2013.

What form should this notice take?

The notice needs to be written and free of charge. It should be written in a fashion that can be understood by an “average” employee. The Department of Labor has published a model Marketplace Notice, which is available in both English and Spanish. The Department of Labor has provided models for both employers who offer health plans and those which do not. These models may be found at: http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf and http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf, respectively. Importantly, the model may be amended to suit individual employer and employee needs.

Employers may provide the notice by first-class mail or electronically if the Department of Labor’s electronic disclosure safe harbor requirements are satisfied.

Are there other employer considerations based on this notice requirement?

Employers should also note that the Department of Labor’s model COBRA election notice has been updated to provide employees with information about Marketplace coverage options and other Patient Protection and Affordable Care Act additions. This updated model notice may also be found at: http://www.dol.gov/ebsa/healthreform/index.html. Please note that the COBRA notice requires specific content, including but not limited to: information about qualifying events, the plan and the COBRA administrator, qualified beneficiaries, information about termination, continuation of coverage, premium payments, and plan administrator communication. This notice may also be amended to suit specific employer and employee needs.

If the Employer wants to create its own notice, what content must it include?

If an employer does not want to use a form notice, its notice needs to cover the following three points:

  1. That a Health Insurance Marketplace exists to enable employees to compare private health insurance options and enrollment in a private health insurance plan. This information must describe the Marketplace’s services and provide contact information for Marketplace assistance.
  2. If the employer has a health insurance plan and the plan’s share of the total allowed costs of benefits under the plan is less than 60% of said costs, the notice must inform employees that they may be eligible for a premium tax credit under the Internal Revenue Code, if a plan is purchased through the Marketplace.
  3. If an employee purchases a plan through the Marketplace, the employee may lose the employer contribution to a health benefits plan and all or a portion of said contribution may be excludable from income for tax purposes.

 In summary, employers need to be prepared to satisfy the FLSA Marketplace notice requirement by October 1, 2013.