Every employer subject to the provisions of the Fair Labor Standards Act ("FLSA") is required to provide a notice to its employees of their health insurance coverage options by October 1, 2013.
The required notice must advise your employees that they may purchase health insurance on one of the new health insurance exchanges, and may apply for tax credits to pay a portion of the premiums and out-of-pocket healthcare costs associated with that coverage. The October 1 deadline coincides with the beginning of open enrollment on the exchanges.
The United States Department of Labor, through its Employee Benefit Security Administration ("EBSA"), has published two model notices for employers to use to comply with the new requirement. Both notices are available on the EBSA's website.
One form is to be used by employers who do not offer a health plan to employees (www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf). This form consists of two pages: Part A provides general information regarding the employee's coverage options (which an employer may use verbatim) and Part B, which requires the employer to include its name, mailing address and contact information. The Form Notice is intended to inform an employee that he or she does not qualify for employer-provided health coverage, and advises the employee that he or she may qualify for tax credits for coverage the employee purchases on the exchange.
The second model notice is to be used by employers that offer health insurance coverage to employees (www.dol.gov/ebsa/pdf/FLSAwithplans.pdf). The model consists of three pages, two mandatory and one optional. Part A of the model notice (which is mandatory) is identical to the Part A of the model notice described above. Part B of the model notice (which is also mandatory) requires the employer to include its name, mailing address and contact information. Part B also requires the employer to specify whether the employer's coverage is offered to all employees, or only some employees. If the employer's coverage is available only to some employees, Part B requires the employer to describe the health plan's eligibility requirements. This part also requires the employer to advise the employee whether its plan includes coverage for dependents, whether the employer's coverage is intended to meet the Affordable Care Act's "minimum value" and "affordability" standards,1 and that, even if the employer has checked the box stating that its plan meets the minimum value and affordability standards, the employee may still qualify for tax credits if the employee purchases coverage on the exchange.
The optional (third) page of the form provides additional information from which the employee can determine whether he or she would qualify for premium assistance for coverage purchased on the exchange. In this regard, the optional (third) page includes disclosures as to whether the employee is currently eligible for employer-provided coverage or will be eligible for coverage within the next three months, whether the employer's coverage provides minimum value, the amount of the employee-paid portion of the premium for single coverage and how often that amount is deducted from the employee's pay (e.g. weekly, bi-weekly or monthly). Finally, the optional (third) page includes a disclosure for the employer to state whether it intends to make changes to coverage during the next plan year (including discontinuing coverage).
Notices, which must be provided in writing, delivered personally or by first-class mail, or electronically (but only if the employer satisfies Department of Labor regulations relating to the electronic delivery of employee benefit disclosures required by ERISA) must be given to every current full and part-time employee, regardless of whether the employee is enrolled or eligible to enroll in the employer's health plan. Employers must also provide the notice to every new hire on or after October 1, within 14 days of the employee's date of hire.
Employers are not required to provide the notice to spouses or dependents of employees who are enrolled in the employer-provided coverage. Nor is the employer required to provide the notice to non-employees who are covered by the employer's health plan (e.g. retirees and COBRA beneficiaries).
For more information. Please contact Raymond McCabe at (716) 566-1408 or rmccabe@hblaw.com or any attorney in our Labor & Employment practice area.
1 An employer provided plan provides "minimum value" if it covers 60% or more of actuarially determined cost of health care. An employer-provided plan is generally considered to be "affordable" if the employee-paid cost of single only coverage does not exceed 9.5% of the employee's Form W-2 wages from the employer.