The Department of Labor (DOL) has delayed the effective date of the requirement that certain employers distribute notices of coverage options available through Exchanges (“Exchange Notices”) until the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges. This was announced in FAQs Part XI of ACA Implementation, posted on the DOL website on January 24, 2013. The original effective date for this distribution requirement was March 1, 2013.
The DOL postponed the effective date of March 1, 2013 for several reasons. First, this notice should be coordinated with HHS’s educational efforts and Internal Revenue Service (IRS) guidance on minimum value. Second, the DOL wants to ensure 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.
Notice of Coverage Options Available Through the Exchanges
Section 18B of the Fair Labor Standards Act (FLSA), as added by section 1512 of the Affordable Care Act (ACA), generally provides that, in accordance with regulations promulgated by the DOL, an applicable employer must provide each employee at the time of hiring (or with respect to current employees, not later than March 1, 2013), a written notice:
- Informing the employee of the existence of Exchanges including a description of the services provided by the Exchanges, and the manner in which the employee may contact Exchanges to request assistance;
- If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through an Exchange; and
- If the employee purchases a qualified health plan through an Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
The Department of Labor is considering providing model, generic language that could be used to satisfy the notice requirement. As a compliance alternative, the 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: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing (78 FR 4594, at 4641), which will be available for download at the Exchange web site as part of the streamlined application that will be used by the Exchange, Medicaid, and CHIP. Future guidance on complying with the notice requirement under FLSA section 18B is expected to provide flexibility and adequate time to comply.