The Patient Protection and Affordable Care Act (“ACA”) requires that all employers covered by the Fair Labor Standards Act notify their employees by Oct. 1, 2013, of the coverage options available to them through the Health Insurance Marketplace.
Who Must Provide the Notice and What Must It Contain?
Employers who are covered by the Fair Labor Standards Act (“FLSA”) must furnish all their employees (part-time and full-time) with a written notice providing the employees with information regarding:
- The existence of the Health Insurance Marketplace, including a description of the services provided by the Marketplace and the manner in which the employee may contact the Marketplace to request assistance.
- Whether the employee may qualify for a premium tax credit or cost-sharing subsidy if the employee purchases coverage in the Marketplace (i.e., does the employer‘s plan provide minimum value and meet the affordability requirements).
- The possibility that the employee may lose employer contributions related to health care coverage if the employee obtains health care coverage through the Marketplace.
Notices are to be provided automatically to the employee, free of charge. Further, the notice must be provided in writing in a manner calculated to be understood by the average employee and can be delivered by first class mail or electronically if it meets certain requirements under the Department of Labor’s (DOL) electronic safe harbor.
Notices provided to employees by health insurance issuers, multi-employer plans and third-party administrators will qualify for meeting the employer’s obligation to provide the notice if the notices are delivered timely and otherwise are complete. However, employers will still be required to provide notices to part-time and other employees not covered under the group health plan.
What Employers are Covered by the FLSA?
The FLSA generally applies to employers who employ one or more employees who are engaged in, or produce goods for, interstate commerce and has annual sales or receipts of at least $500,000. It may also apply if the employer is a hospital or other healthcare institution, school, or is a federal, state or local government agency.
It is not clear if employees of firms that are not a “covered enterprise” (as described above) but are involved in interstate commerce and thus fall under “individual coverage” in the FLSA are required to receive the notice.
The DOL’s Wage and Hour Division provides guidance relating to the applicability of the FLSA in general, including an internet compliance assistance tool to determine applicability of the FLSA. The link to the DOL compliance tool is:www.dol.gov/elaws/esa/flsa/scope/screen24.asp.
When is the Notice Required to be Provided?
The notice is required to be furnished to current employees no later than October 1, 2013. New employees must be furnished the notice at the time of hiring.
Starting January 1, 2014, the notice will be deemed timely delivered if provided to a new employee within 14 days of the employee’s start date.
Penalties for Not Filing Notice
There has been some concern over a potential $100 per-day penalty for not providing the notice based upon general penalties that may apply under the ACA and FLSA. However, the DOL has issued a one question FAQ that addresses this issue. It states that, “If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.” (emphasis added).
Model Form Notices Available
Two Model Form Notices are provided by the DOL – one for employers that offer coverage and the other for employers who don’t offer coverage. For your convenience, the Model Form Notices may be accessed by clicking this link: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/coverage-options-notice.
Employer Coverage Information
For employers that offer coverage, Part B of the Model Notice requires specific information relating to the coverage being provided – that is, the employer is to check-the-box with respect to whether the coverage provided meets the “minimum value” standard or is “affordable,” based upon employee wages. These concepts, defined by the tax code, require a thorough review of both the coverage being offered, as well as a review of employee wages. In addition, if multiple types of coverage are being offered, multiple versions of Part B may be required.
The final page of the Model Notice may be voluntarily completed by the employer. However, because employees will be required to provide the information when applying to the Marketplace, providing such information now will help reduce the likelihood that human resource personnel will be burdened with multiple requests later. In addition, completion of the last page will also ensure that the employees have the correct information when completing their applications for the Marketplace (i.e. they won’t be guessing).