One of the upcoming ACA requirements for employers is to provide a notice to employees about health insurance coverage available through a public exchange. Employers must provide this notice to each employee, regardless of plan enrollment status or part-time or full-time status, by October 1, 2013. The notice must be provided automatically, free of charge, and written in language that the average employee can understand. It may be provided by first class mail or electronically, assuming the requirements of the U.S. Department of Labor’s electronic disclosures safe harbor are met. It must also be provided to new hires in 2014. The DOL will consider a notice delivered timely to a new employee if it’s provided within 14 days of the start date.
The notice must inform each employee of three things:
- The existence of state or federal health insurance exchanges.
- If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60%, then the employee may be eligible for a federal premium tax credit if the employee purchases a qualified health plan through an exchange.
- If the employee purchases a qualified health plan through an exchange, then the employee may lose the employer contribution to any health benefits plan offered by the employer; also, all or a portion of such contribution may be excludable from income for federal income tax purposes.
Two types of model notice are provided by the DOL: Exchange notice for employers with coverage and exchange notice for employers without coverage. Additionally, we have included an updated COBRA letter template. The COBRA notice now includes language that references the Exchanges. We suggest that you provide the notices to employees during the first or second weeks of September. A short cover memo, such as the one below, should suffice:
The Federal Government requires us to notify you of your option to purchase health insurance through the new Health Insurance Marketplaces which will be open for open enrollment on October 1, 2013. The state Marketplace in Massachusetts is the Massachusetts Health Connector. We have attached a model Notice drafted by the government. Please be mindful that, depending upon your own household finances, you might qualify for a premium subsidy or premium tax credit if you seek health insurance through the Marketplace.
We are required to advise you if the health plan we make available to you covers 60% of the costs of benefits provided to you or provides “minimum value.”
Our health plan:
—–Covers 60% of the cost of benefits provided to you
—–Does not cover 60% of the cost of benefits provided to you.
Finally, please be advised that if you purchase a health plan through the Marketplace, you may lose the employer contribution (if any) to any health benefits plan that we offer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes. For additional information on Massachusetts Health Connector, please visit their website at www.healthconnectorma.org
We have also provided a link to a presentation done by one of our vendors on the Exchange Notices that you may find very helpful.