October 1, 2013 Deadline to Notify Employees About Exchanges
Employers have until October 1, 2013 to notify employees of the option for the employee to buy health insurance coverage through the "Health Insurance Marketplace," otherwise known as the Exchange.1 The Department of Labor (DOL) announced in Technical Release 2013-2, which may be found at http://www.dol.gov/ebsa/newsroom/tr13-02.html, that under section 18B of the Fair Labor Standards Act (FLSA), as amended by the Affordable Care Act (ACA), employers must notify current employees about Exchanges no later than October 1, 2013. The DOL also provided a model notice that employers may use depending on whether the employer has or does not have a health plan. In addition, the DOL released an updated model notice for COBRA participants. The following are notices for employers with plans for both current and new employees and for COBRA participants.
Action to Take: Employers who have not already done so should review the Technical Release and the model notices and provide a notice either electronically (if the requirements of DOL's electronic safe harbor rules are met - see details below) or through first class mail to their employees on or before October 1.
Cheiron Observation: DOL has indicated (in FAQs XVI available at http://www.dol.gov/ebsa/faqs/faq-aca16.html) that the Plan can provide the notices to their participants on behalf of the contributing employer(s), or to all employees of the employer even if not covered by the Plan. However, it is still the employer's responsibility to see that an appropriate notice is provided to all employees; for example, if the Plan only sends notices just to participants, then the employer would need to send it to their non-eligible employees. Moreover, each employer can address how the notices will be understood by their employees and whether any additional communication or explanation will be needed to prevent confusion.
In addition to the one time notification of current employees, new employees must be provided the same notice at the time of hire. The DOL will consider a notice to be provided at the time of hiring if it is provided within 14 days of an employee's start date. Retirees do not have to receive the notice. No deadline has been given for providing the updated notice that includes the Exchange information for COBRA participants.
In general, the electronic safe harbor rules are met for the Exchange notices if the topic line or cover email is clear that this is a notice about the Exchanges, a read receipt is received, and the option to get a paper copy is included as part of the notice or cover email.
An employer is subject to the FLSA, in general, if it is engaged in, or produces goods for, interstate commerce and has an annual volume of business of at least $500,000. In addition, the FLSA covers hospitals, institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled (who reside on the premises), schools and institutions of higher learning, and Federal, state, and local government agencies.
An employee for the Exchange notice requirement includes full and part time employees. Employees for this Exchange notification may also include contracted employees, independent contractors, and leased employees.
No specific penalty for non-compliance has been provided by the Department of Labor.
Cheiron health consultants can assist you with preparation of the notice to employees of the availability of the Exchanges.
Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Therefore, we do not provide legal services or tax advice.
1Previously, the deadline had been March 1, but was postponed. See our Health Alert of January 25, 2013.