Employers Required to Provide Notice to Employees by October 1, 2013, Regarding Health Insurance Marketplace Coverage
As most of you know, the Patient Protection and Affordable Care Act – commonly known as ObamaCare – enacted provisions designed to expand access to affordable healthcare coverage, including provisions for coverage to be offered through a state-based Health Insurance Marketplace (also known as “the Exchange”). The law also requires almost all employers to provide a notice to employees regarding this coverage no later than October 1, 2013. This deadline is NOT affected by the well-publicized decision to delay by a year the so-called “employer mandate” provisions of the Act.
Who Must Provide The Notice And To Whom
All employers subject to the federal Fair Labor Standards Act (“FLSA”) are required to provide the notice. Thus, because of the wide scope of the FLSA, it is highly likely that you must provide this notice to your company’s employees.
As a general matter, the FLSA applies to employers that employ one or more employees who are engaged in or produce goods for interstate commerce. For most businesses, a test of not less than $500,000 in annual dollar volume of business applies. Almost all employers, small and large, are subject to the FLSA and thus would be required to provide the notice to their employees. We would encourage any business that believes that it is not subject to the FLSA, and therefore not obligated to provide the notices, to contact your SFSS&W attorney promptly.
FLSA-covered employers must provide the notice to all employees, regardless of whether the employer provides a group insurance plan, whether the employee is eligible for employer-sponsored insurance, and/or the number of hours worked by the employee. For employees employed as of October 1, 2013, the notice must be provided no later than October 1, 2013. For employees hired after October 1, 2013, the notice must be provided at the time of hiring. For 2014, the Department of Labor has announced it will consider a notice provided to a new employee within fourteen days of the employee’s start date to be timely.
The Department of Labor has stated that an employer satisfies its obligations to provide the notice when another party (such as the insurance plan with whom the employer contracts) provides a timely and complete notice. However, the notice must be provided to ALL employees. Thus, an insurance company’s providing notice only to employees eligible to participate in the employer-sponsored plan will not suffice in situations where, for example, an employer has employees who are not eligible to participate in the employer-sponsored plan. In this situation, the employer would be required to supplement the insurance-company-provided notices.
Content Of Notice And Availability Of “Model Notices”
The notice is required to address the following:
- The existence of the Marketplace, including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
- 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, that the employee may eligible for a premium tax credit under Section 36B of the Internal Revenue Code if the employee purchases a qualified health plan through the Marketplace; and
- If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for federal income tax purposes.
The Department of Labor has promulgated model notices that employers may distribute to satisfy the statute’s requirements. Employers are not required to use these notices if they prefer an alternate format in which to convey the required content. There are four model notices: one for employers who offer a health plan to some or all employees (www.dol.gov/ebsa/pdf/FLSAwithplans.pdf); one for employers who do not offer a health plan (www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf); and Spanish-language versions of both. As the notice is required to be provided in a manner calculated to be understood by the average employee, employers who employ a significant number of non-English speaking employees should provide translated notices.
Each model notice includes a “Part A” with standard information about the Marketplace (with a single blank to be filled in by employers who provide health plans as to whom to contact about the plan) and a “Part B” to be customized by each specific employer. “Part B” of the model notice for employers who provide health plans includes on the final page of the notice four questions that are expressly designated as optional for the employer to complete; assuming you elect not to complete these questions (which include customizing the notice as to each particular employee’s eligibility to participate in the employer plan), you will likely want to delete this final page of the notice to avoid confusion, along with the last sentence on the previous page which reads, “Here’s the employer information you’ll enter when you visit HealthCare.gov to find out if you can get a tax credit to lower your monthly premiums.”
Methods of Delivery
Employers may provide the notice by first-class mail. Alternately, employers may provide notice electronically if the employer complies with the below-summarized requirements for electronic delivery.
The requirements for electronic delivery differ depending on which of two groups employees fall into: (i) employees who have access to a computer or other electronic device at their place of work and for whom access to the employer’s electronic information system is an integral part of the employee’s duties; and (ii) other employees who either do not have such access or for whom access is not an integral part of their duties. For employees in the first category (who do have computer access and for whom access is an integral part of their duties), employers may provide electronic notice so long as they comply with the following four requirements:
- The employer must take appropriate and necessary measures reasonably calculated to ensure the system results in actual receipt of transmitted information (for which the regulation gives as examples using return-receipt or notice of undelivered electronic mail features, or conducting periodic reviews or surveys to confirm receipt of transmitted information);
- The employer must take appropriate and necessary measures reasonably calculated to ensure the system protects the confidentiality of personal information relating to the individual’s accounts and benefits (which will be implicated if an employer who sponsors a health plan chooses to complete the “optional” section of “Part B” that customizes the notice for each employee);
- The employer must give notice that apprises the recipient of the significance of the document (for example, put in the “subject” line “Important Notice Regarding New Health Insurance Marketplace Coverage and Your Health Coverage”) and of the right to request and obtain a paper version; and
- The employer must provide, upon request, written copies of the information transmitted electronically.
For employees in the latter category (who do not have access to a computer or other electronic device at their place of work or for whom access is not an integral part of their duties), electronic notice will be compliant only if a complicated procedure of obtaining affirmative consent from employees after providing them a detailed notice regarding electronic delivery is followed. In most cases, we believe our clients will prefer to provide notice by mail to employees in this category. Should you be interested in learning the details of the procedure required for electronic notice to such employees, please contact your SFSS&W attorney.
Millicent N. Sanchez
Janet I. Swerdlow
David A. Wimmer
Lori M. Yankelevits
Karen E. Rhodes