Aug 22, 2013 - available at http://www.dol.gov/ebsa/newsroom/tr13-02.html, which provides ... An employer can provide no
Littler Mendelson, P.C. 1150 17th Street N.W. Suite 900 Washington, DC 20036
August 22, 2013
Peter A. Susser 202.414.6868 direct 202.842.3400 main 202.842.0011 fax
[email protected]
Mandatory Notice to Employees Regarding Health Care Coverage
The Affordable Care Act provides employees, including those who are offered health coverage by their employers, with the option to purchase health care coverage through new health insurance marketplaces that will operate in every state. To facilitate the development and operation of these marketplaces, the Affordable Care Act also added new section 18B to the Fair Labor Standards Act (“FLSA”), requiring all employers who are subject to the FLSA to provide a one-time written notice about health insurance marketplaces to all of their current employees before the marketplaces open, as well as written notice to all new employees upon hire. Employers must provide notice to current employees October 1, 2013, however marketplace coverage will not start until January 1, 2014. This spring, the Department of Labor (“DOL”) issued Technical Release 2013-02, available at http://www.dol.gov/ebsa/newsroom/tr13-02.html, which provides employers with temporary guidance on the required timing and content of the notices. The notice requirements highlighted in the release are outlined below. Which Employers Must Provide Notice of Coverage to Employees? All employers that are subject to the FLSA must provide the notice. Generally, the FLSA applies to employers that are engaged in interstate commerce and have at least $500,000 in annual revenue. Therefore, the notice requirement will apply to virtually all mid-sized and large employers, and most small employers as well. Which Employees Must Receive a Notice of Coverage Options? Employers must provide a notice of coverage options to all employees, regardless of whether the employees are full- or part-time employees, or whether the employees currently participate in any employer-provided health plan. Employers may also be obligated to provide the notice to independent contractors, and to contract and leased workers, depending on the nature of their relationship with the employer as determined under the FLSA's "economic reality" test.
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When and How Must Employers Provide Notices to Employees? Employers must provide each current employee with a notice of coverage options by October 1, 2013. New employees must be provided with a notice of coverage options at the time of hire. For 2014, the DOL will consider a notice to be provided at the time of hire if it is provided within 14 days of an employee’s start date. An employer can provide notice of coverage options by first-class mail or electronically. To provide the notice electronically, an employer must meet the same requirements that apply to electronic distribution of ERISA plan disclosures. What Information Must Employers Include in the Notice of Coverage Options? The notice of coverage options must be in writing and be written in a manner calculated to be understood by the average employee. FLSA Section 18B requires the notice of coverage options to provide employees with information about: •
The existence of health insurance marketplaces;
•
Services provided by health insurance marketplaces;
•
How to contact a health insurance marketplace for assistance;
•
The possibility that employees may lose the right to exclude employer and employee contributions from their income for federal income tax purposes if they purchase a marketplace plan;
•
The possibility that employees may lose their employer contribution (if any) to any employer-provided health plan if they purchase a marketplace plan; and
•
Whether the employees may be eligible for a premium tax credit if they purchase a qualified health plan through a health insurance marketplace.
What Must the Notice Look Like? The DOL has issued two model notices for employers to review. The first notice is for employers that do not offer health care coverage to any employees. That notice is available at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf. This notice must include the information described above, as well as an explanation of the impact of the availability of employer health coverage on the employee's eligibility for subsidies on the Marketplace. The model employee notice does not require the employer to provide specific contact information for the Marketplace in the state where the employee resides, but rather refers the employee to the www.healthcare.gov website for contact information for the Marketplace in the employee's
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area. This model employee notice requires the employer to provide contact information for the employer that an employee will need for an application for a premium subsidy on the marketplace. The second version of the notice is for employers that offer health insurance coverage to some or all employees. That notice is available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf. It must include the same information as well as contact information for employees who want to obtain more information about the employer's health care coverage. The disclosure section requires the employer to provide a description of employees eligible for health care coverage, indicate whether dependent coverage is offered, whether the health care coverage offered meets the minimum value standard and that the cost of coverage is intended to be affordable. In addition, the model employee notice includes optional information an employer may provide to employees regarding their coverage choices, including whether an employee is eligible in the next three months for employer coverage, the premium for employer-based coverage, and what changes the employer will make for the next plan year. Employers may provide employees with one of the model notices or create their own version that includes the mandatory items listed above.*
________________________ * The preceding discussion is for informational purposes only and is not intended to and does not constitute legal advice or the formation of an attorney-client relationship. IFDA members should seek guidance that apply to their individual facts or circumstances through legal and benefits counsel.
