Enrollment in the Health Insurance Marketplace is set to begin on October 1, 2013. While many employers believe the requirements of the Patient Protection and Affordable Care Act (ACA) were put off a year for them, many provisions still apply now.
By no later than October 1, 2013, most employers must distribute a notice of coverage options to their employees. For new hires after October 1, 2013, the notice of coverage options must be provided to the employee within 14 days of their start date. This notice form should be added to all new hiring packets.
The U.S. Department of Labor (DOL) has issued two model notices that may be used to meet this obligation. One of the model notices is for employers who offer employer-sponsored health insurance to some or all of their employees. The other model notice is to be used by employers who do not offer coverage. Both of the model notices can be found on the DOL Website under the header “Notice to Employees of Coverage Options.”
Where Does This Requirement Come From?
Section 1512 of the ACA created a new section 18B under the Fair Labor Standards Act (FLSA). This new section requires employers to provide notice to employees of coverage options available through the Health Insurance Marketplace.
Which Employers Are Required to Issue the Notice?
The obligation to distribute the notice applies to all employers subject to the FLSA. In general, this includes employers with one or more employees who are engaged in, or produce goods for, interstate commerce. Employers with gross revenue exceeding $500,000 are generally considered covered employers under the FLSA.
What Does The Notice Have to Include?
The appropriate current DOL model notice satisfies the content requirements of the statute. A modified version can be used provided it includes the following information:
• Information that informs the employee about the potential consequences of purchasing a qualified health plan through the Health Insurance Marketplace: that all or a portion of the contribution may be excludable from income for federal income tax purposes and the employee may lose the employer contribution, if there is any, to any health benefit plan offered by the employer; and
• Notice that the employee may receive a premium tax credit under Section 36B of the Internal Revenue Code if the employee purchases a qualified health plan through the Health Insurance Marketplace.
When Do I Need to Do This?
Employer must provide the notice to all current employees not later than October 1, 2013. The notice is required to be provided at no cost to the employee. You must also provide the notice to each new employee at the time of hire beginning October 1, 2013. Until the end of 2014, the DOL is considering a notice to be timely provided if the notice is provided within 14 days of an employee’s start date.
What Happens If I Don’t Provide the Notice?
An employer who fails to provide the required notice in a timely manner will be in violation of ACA and the FLSA. Generally, that may subject the employer to investigation by the DOL and potential penalties of $100 per day, per employee.
Employers should be determining what notice applies to their business and should be distributing the notices soon in order to meet the October 1, 2013 deadline to distribute. In addition, employers should be amending their New Hire and Orientation packets to include the appropriate ACA notice. Don’t make the mistake of relying on others to send out the notices for you, i.e. benefits providers or insurance brokers. While they are a wonderful source for the required documents, the regulations put the responsibility to distribute these documents on the employer and not their agents. If you have any questions regarding the required notice or ensuring your new hiring procedures are correct, please contact your Weintraub Tobin attorney.