August 21, 2013 Top 10 Questions and Answers Regarding Exchange Notice Requirements
KEEPING YOU INFORMED…
The Affordable Care Act requires, among other things, the creation of healthcare exchanges or marketplaces through which health insurance policies may be purchased. New York has opted to establish its own exchange (the New York Health Benefit Exchange), which can be accessed at: http://www.healthbenefitexchange.ny.gov/. Certain employers are required to issue to their employees a notice of the availability of health care exchanges (‘the Notice”), and the deadline to do so is rapidly approaching. This memorandum outlines the top 10 questions and answers regarding an employer’s notice requirements. Our advice is based upon U.S. Department of Labor (*the DOL”) Technical Release 2013-02. At this time, regulations regarding the Exchange notice requirements have not been issued.
1. Which employers must provide their employees with the Notice?
The following types of employers, regardless of whether they offer health insurance to their employees, must comply with the Notice requirements: employers to which the Fair Labor Standards Act (FLSA) applies; hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools and institutions of higher education; and federal, state and local government agencies.
2. To whom must the Notice be given?
The Notice must be given to each part-time and full-time employee, regardless of whether the employee is enrolled in the employer’s health insurance plan. There is no obligation to provide a separate Notice to dependents who are not employees.
3. What information must the Notice contain?
The Notice must, at a minimum, accomplish the following:
A. Inform the employee of the existence of the health care exchange, including a description of the services provided by the exchange, and the manner in which the employee may contact the exchange to request assistance;
B. Notify the employee that, if his/her employer’s health inswance plan does not provide “minimum value” and he/she purchases insurance through the exchange, he/she may be eligible for a premium tax credit; and
C. Advise the employee that, if he/she purchases insurance through the exchange, he/she may lose his/her employer’s contribution (if any) to any health benefits plan offered by the employer and that all or a portion of that contribution may be excludable from income for federal income tax purposes.
The DOL issued two model Notice forms, one for employers which offer health insurance to some or all of their employees and the other for employers which do not offer health insurance. There are English and Spanish versions of both Notice forms, which are available at:
4. Can an employer distribute the DOL Notice form “as is?”
No. The Notice form contains blank sections which the employer must complete before distributing the Notice to its employees. The DOL has published a Microsoft Word version of the Notice form which can be downloaded and modified prior to distribution.
5. Is an employer obligated to use the DOL Notice form?
No. An employer can create and use its own Notice, provided that the Notice meets the content requirements set forth above in Question # 3. We recommend using the DOL Notice form.
6. When must the Notice be provided to employees?
For employees who are employed prior to October 1, 2013 , employers must provide the Notice by no later than October 1, 2013.
For employees who are employed on or after October 1, 2013, employers must provide the Notice at the time of hiring. For 2014, the DOL will consider the Notice to be timely provided if it is given to the employee within 14 days of his/her start date.
7. How must an employer distribute the Notice to its employees?
The Notice may be provided by first class mail. Alternatively, under certain circumstances, tle Notice may be electronically provided. We recommend that each employer maintain a document listing each employee, the date on which the Notice was provided and the manner in which it was provided.
8. Under what circumstances can an employer electronically provide the Notice?
Electronic distribution is permissible to an employee who: (l) has the ability to effectively access documents furnished in electronic format at arty location where the employee is reasonably expected to perform his/her job duties; and (2) has access to the employer’s electronic information systems as an integral part of his/her job duties. The employer must take reasonable steps to ensure that electronic delivery results in the actual receipt of the document (i.e., using a return-receipt) and that any confidential employee information is protected.
Along with the Notice form, the employer must provide the employee with information regarding the Notice’s significance that is not otherwise reasonably evident by the Notice itself. The employer must also notify the employee that a paper copy is available upon request. While the federal government has not issued sample language, we recommend the following:
Attached is a form entitled “New Health Insurance Markeplace Coverage Options and Your Health Coverage.” This document describes the benefits available to you pursuant to the New York Health Benefit Exchange, an online marketplace where you can purchase health insurance. Upon request to _______________ (INSERT NAME OF RESPONSIBLE INDIVIDUAL OR DEPARTMENT), a paper copy of the form will be provided to you.
We recommend that the first two sentences be included in a cover letter to employees who are provided the Notice via first class mail.
9. Can an employer charge employees for the cost of distributing the Notice?
No. The Notice must be provided free of charge.
10. Are there any penalties imposed upon employers that do not comply with the Notice requirements?
At this time, there is no indication that employers will be penalized for failwe to comply with the Notice requirements. We will advise you if new regulations are issued which impose a penalty.
Please contact us if you have any questions about your obligation to provide the Notice.
THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF TITE CURRENT LAW. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.
© Lamb & Barnosky, LLP 2013