ACA requires employers to notify employees about exchanges

ACA requires employers to notify employees about exchanges

As federal and state governments scramble to get new health insurance marketplaces off the ground by Oct. 1, employers face a new federal mandate under the Affordable Care Act to notify employees about these marketplaces, also known as exchanges.

Employers must provide notice to existing employees by Oct. 1, 2013, the Department of Labor said this spring. The employee-notice requirement applies to all employers covered by the federal Fair Labor Standards Act.

This provision of the ACA creates a new section 18B of the FLSA that requires employers to notify employees in writing about exchanges and federal subsidies to buy private health plans through exchanges. The notices also must inform employees who opt to buy coverage through exchanges (instead of employer-sponsored plans) that they could lose their employer’s contribution (if any) to employer-sponsored coverage. Finally, the notice must explain that health plans bought on exchanges don’t have the same tax benefits as employer-sponsored coverage.

The DOL will administer the new Section 18B notice requirement. Under pressure from employers trying to prepare for this part of the law, the agency released temporary guidance and model notices for employers in May.

Here’s a Q&A on what’s employee notification involves, according to the DOL’s temporary guidance. Download the NRA’s Health Care Law Primer for other information on the law.

Q: What notice are employers required to provide to employees?

A: The law requires employers subject to the Fair Labor Standards Act to:

  1. Provide employees with information about the exchange in their state, as well as contact information and a description of the services provided by an exchange.
  2. Inform employees they could be eligible for federal premium tax credits if they buy a qualified health plan through an exchange.
  3. Inform employees that if they purchase a qualified health plan through an exchange, they could lose the employer contribution (if any) to any health benefits plan offered by the employer. Employers also must disclose that all or a portion of such contribution to employer coverage may be excludable from income for federal income-tax purposes. That means plans bought on an exchange won’t have the same tax benefits of employer-sponsored coverage.

Q: When are employers required to give employees the written notice?

A: Employers are required to provide written notice by Oct. 1, 2013, for existing employees; at the time of hiring for employees hired between Oct. 1 and Dec. 31, 2013; and within 14 days of hiring starting in 2014, according to the DOL’s temporary guidance.

Q: Which employees must get the written notice?

A: Employers must provide the notice to all employees, including full-time, part-time, seasonal and temporary employees.

Q: Is there a sample notice I can use?

A: In May, the DOL released model notices employers can use to meet the FLSA requirement. There’s a model notice for employers who offer health benefits, and one for employers who don’t. Both are available in Spanish. The model notices are templates, and include information that goes beyond the actual requirements of the law. As long as an employer’s notice informs employees of the three items listed in Question 1, employers don’t have to use the exact language in the DOL’s model notices.

The DOL’s two-part model notices include:

  • Part A — information on the three items outlined in Question 1.
  • Part B — additional information employers can choose to give to employees to take to exchanges to apply for health care coverage. Part B includes contact information for the employer. For employers who offer health care coverage, Part B allows the employer to note which employees and dependents are eligible for coverage, whether the employer’s coverage meets new minimum-value standards under the ACA, and whether the coverage is intended to be “affordable” for employees. Employers have the option of using Part B to provide further details on their health plans, including whether the employee is or soon will be eligible for employer-based coverage, what the employee’s share of the premium is, and any changes the employer plans for the new plan year.

Q: Do employers have to use DOL’s model notices?

A: No. As long as employers provide employees with the three basic pieces of information outlined under the ACA (see Question 1 above, included in “Part A” of the DOL’s model notices), they meet the law’s notification requirements.

Q: How does information need to be provided?

A: Employers must provide the FLSA notice in writing, “in a manner calculated to be understood by the average employee,” the Labor Department’s guidance said. Employers can notify employees electronically as long as the electronic notice meets DOL standards. The National Restaurant Association now offers an online tool its members can use to provide employees with the FLSA notice. The website includes the ability to track which employees received the notice.

Q: Which employers are covered by the FLSA?

A: The FLSA is one of the most important federal laws for employers, covering everything from the federal minimum wage to teen labor restrictions. The FLSA generally covers employees in enterprises with annual sales of $500,000 or more (“enterprise coverage”), and any employee who works in interstate commerce or in the production of goods for interstate commerce, regardless of the level of his or her employer’s annual sales (“individual coverage”). The DOL’s website offers more details.

(Source: National Restaurant Association)

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