In preparation for the implementation of the Patient Protection and Affordable Health Care Act (the "Act"), the United States Department of Labor has adopted certain rules imposing obligations upon employers, one of which has an upcoming deadline.
Recently, the Department of Labor issued a Technical Release, Technical Release 2013-02, addressing this new requirement, which requires employers to notify their employees of their health insurance options. This notice requirement is found in a new section of the Fair Labor Standards Act created by the Act. While employers will not be subject to any fines or penalties for not distributing the notices, it is, nevertheless, recommended that all employers distribute the notices whether they offer health insurance to their employees or not.
Employers Subject to Requirement
This new notice requirement applies to any employer who is subject to the Fair Labor Standards Act. Thus, if you employ one or more employees who are engaged in, or produce goods for, interstate commerce, you are most likely subject to this requirement.
Providing Notice to Employees
Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status or of part-time or full-time status. Employers are not required to provide any such notice to dependents or other individuals who may become eligible for coverage under the plan but who are not employees.
Timing and Delivery of Notice
Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department of Labor will consider a notice to be given at the time of hiring if the notice is provided within fourteen (14) days of an employee's start date.
For employees employed before October 1, 2013, employers are required to provide the notice no later than October 1, 2013.
The notice must be provided in writing in a manner "calculated to be understood by the average employee". It may be distributed by:
- First-class mail
- Hand delivery
- Payroll Stuffer
- Electronic Delivery such as e-mail or posted on your internal website.
Form and Content of Notice - Model Notice
The new requirement provides that an employer must provide each employee at the time of hiring (or with respect to current employees, no later than October 1, 2013) a written notice:
- Informing the employee of the Health Insurance Marketplace (the new competitive private health insurance market created by the Act), 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 be 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 provided two model notices - one for employers that offer coverage to some or all of its employees and one for employers that do not offer coverage. The vast majority will use the first notice, even if they have employees that are not eligible for coverage. The only time the second notice will be used is if the employer does not sponsor a group health plan at all. The model notices can be found on the Department of Labor's website: www.dol.gov/ebsa/healthreform.
The model notice for employers who offer coverage has two parts (Part A and Part B). Part A is one page. Part B is two pages. The model notice for employers who do not offer coverage also has two parts but Part B is only one page.
There are model notices in Spanish. The guidance does not state when such notices are required but if you have employees that only speak Spanish it is recommend that you distribute the Spanish versions to them.
Technical Release 2013-02 is silent on whether the employer must use all of Part B but the second page of Part B (on the form for those employers that offer coverage) states that portion is optional. The first page of Part B does not contain similar language so it is recommended that the first page of Part B be completed.
Failure to Distribute Notice
Again, the DOL stated that an employer will not be subject to any fines or penalties for not distributing the notice. However, the distribution of these notices is still recommended, as doing so may serve as a benefit for the employer as far as communication and may eliminate or at least reduce employees' individual questions between now and when the employer mandate portion of the Affordable Care Act is set to go into effect in 2015. As this is an ever-changing area with new guidance coming out regularly, the potential for a significant amount of questions from your employees is likely.