Affordable Care Act: Required Marketplace Notice
On October 1, 2013, one of the first employer action items under the Affordable Care Act (ACA) takes effect. Employers who are subject to the Fair Labor Standards Act (FLSA)1 will be required to inform their employees of health benefits alternatives available to them by virtue of the ACA.
As you have probably heard by now, the ACA has created health care “exchanges.” These exchanges, collectively referred to as the “Marketplace,” are essentially a group of private health insurance companies which provide an alternative health insurance product. Open enrollment for the Marketplace begins October 1, 2013. Because this will be a new option for employees, the ACA requires employers to inform their employees of the option to participate in the Marketplace.
The notice to employees must include the following:
- Information about the existence of the Marketplace, including a description of the services provided by the Marketplace, as well as contact information for the Marketplace;
- Information regarding the premium tax credit that is available to employees who purchase a qualified health plan though the Marketplace; and
- Notification that if the employee purchases insurance through the Marketplace, the employee may lose the employer contribution to health benefits and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
This notice requirement applies to all employees, regardless if they are full or part time, exempt or non-exempt, or whether or not they currently receive insurance through the employer. Importantly; however, employers are not required to provide this notice to dependents of the employees, or other individuals who are or may become eligible for coverage under the plan, but are not employees.
The timing of this notice is significant. Beginning October 1, 2013, employers are required to provide this notice for all new employees hired on or after that date, within 14 days of the start date. Employees who began employment prior to October 1, 2013, are required to receive the notice by October 1, 2013.
The notice can be distributed either by postal mail or electronically. Although not required by the ACA, Houston Harbaugh recommends requesting a return receipt to document that the notice was in fact delivered to the employee when distributed by mail. You may notify employees electronically, via email, as long as you meet the federal requirements for electronic disclosure.
In the interest of ensuring the quality of the notices, the Department of Labor has created model notices, which are available at http://www.dol.gov/ebsa/healthreform/. You will find two separate model notices—one for employers who provide insurance, and one for employers who do not—under the section heading Notice to Employees of Coverage Options.
1 Virtually all private employers and most public employers are subject to the FLSA. If an employer engages in interstate commerce, it is subject to the FLSA. Because of the broad nature of the interpretation of engaging in interstate commerce, any employer which does business with any out of state entity, including to purchase supplies, etc., qualifies as an employer engaged in interstate commerce. However, if a business has less than $500,000 in annual revenue, it is not subject to the FLSA. For more information, please visit http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.
2 These rules can be found at 29 C.F.R. 2520.104b-1(c).