Tuesday, March 12, 2013

Exchange Notice Requirements Delayed

The Affordable Care Act (ACA) requires employers to provide all new hires and current employees with a written notice about ACA’s Health Insurance Exchanges, effective March 1, 2013.

On January 24, 2013, the U.S. Department of Labor (DOL) announced that employers will not be held to the March 1, 2013 deadline. They will not have to comply until final regulations are issued and a final effective date is specified.

This HANYS Benefit Services Legislative Brief details the expected timeline for the Exchange notice requirements.


Exchange Notice Requirements

In general, the notice must:
  • inform employees about the existence of the Exchange and describe the services provided by the Exchange; 
  • explain how employees may be eligible for a premium tax credit or a cost-sharing reduction if the employer's plan does not meet certain requirements; 
  •  inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of this employer contribution may be excludable for federal income tax purposes; and 
  •  include contact information for the Exchange and an explanation of appeal rights. 

This requirement is found in Section 18B of the Fair Labor Standards Act (FLSA), which was created by ACA. DOL has not yet issued a model notice or regulations about the employer notice requirement.

When do Employers have to Comply with the Exchange Notice Requirements?

Section 18B provides that employer compliance with the notice requirements must be carried out "[i]n accordance with regulations promulgated by the Secretary [of Labor]." Accordingly, DOL has announced that, until regulations are issued and become applicable, employers are not required to comply with the Exchange notice requirements.

DOL concluded that the notice requirement will not take effect on March 1, 2013, for several reasons. First, this notice should be coordinated with the U.S. Department of Health and Human Services’ (HHS) educational efforts and Internal Revenue Service guidance on minimum value. Second, DOL is committed to a smooth implementation process, including:
  • providing employers with sufficient time to comply; and 
  • selecting an applicability date that ensures that employees receive the information at a meaningful time. 
DOL expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.

DOL is considering providing model, generic language that could be used to satisfy the notice requirement. As a compliance alternative, DOL is also considering allowing employers to satisfy the notice requirement by providing employees with information using the employer coverage template as discussed in the preamble to the proposed rule on Medicaid, Children's Health Insurance Programs, and Exchanges.

Future guidance on complying with the notice requirement under FLSA Section 18B is expected to provide flexibility and adequate time to comply.

Source: U.S. Department of Labor

This HANYS Benefit Services Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

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