October 1 - Deadline for employer notification of Health Insurance Exchange

By October 1, 2013, employers covered by the Fair Labor Standards Act (FLSA) should provide a written notice to their employees that describes certain elements of the Health Insurance Exchanges expected to go into effect at the beginning of next month. Employers may choose from a number of options when distributing the notices and will find two model notices published by the Department of Labor¹ helpful in complying with the requirement. While strongly encouraged to do so, the Department of Labor made clear in a recently published online FAQ that there will be no fine or penalty under the law for failing to provide the notice.²

Section 1512 of the Affordable Care Act amends the FLSA and requires notification of the health exchanges—the competitive online market for health insurance where individuals may purchase health plans—be given to employees by October 1. While the requirement applies only to companies subject to the FLSA, this includes a large category of employers and will impact many private-sector employers and governmental entities.

The FLSA applies to

• employers whose annual gross volume of sales total $500,000 or more;
• governmental or public agencies; or
• employers engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises.

If you fall within one of these broad categories, then a written notice must be delivered to every employee, full-time and part-time, regardless of whether or not they are provided with health benefits. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan, but who are not employees.

Employers can comply with the requirement by choosing from a number of options for distributing the notices. These include:

• sending the notice by First-Class U.S. Mail;
• emailing the notice if all employees have a company email address and if the Department of Labor electronic safe harbor is met³;
• attaching the notice to the paychecks of all employees; or
• personally distributing the notice to all employees.

The notification is required to contain certain information, which will vary depending on whether or not the employer offers health benefits.

• The notice should inform employees that the Exchange will go into effect October 1, 2013, and include a description of the services provided by the Exchange, as well as the manner in which the employee may contact the Exchange to request assistance.
• The notice should contain an explanation of whether employees will receive at least 60% coverage of essential health benefits through the employer-provided coverage (if applicable), and whether employees will be eligible for a premium tax credit if they purchase a plan through the Exchange.
• Employers will be asked to provide certain information about themselves, including a contact person and Employer Identification Number (EIN), for employees to use if they decide to complete an application for coverage on the exchange.

Employees who purchase a qualified health plan through the Exchange will also need to be informed that they may lose the employer contribution to a health plan offered by the employer.

Whether you are completing the Department of Labor’s model notices or creating your own, the attorneys at Stites & Harbison are ready to assist.

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¹http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf and http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

²http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html

³29 CFR 2520.104b-1(c)