Important Employer Deadline under the Healthcare Law Is Almost Here

Unless the federal government does a dramatic about-face, the public health insurance exchanges will be up and running October 1 for enrollment in 2014. Many employers are also facing an October 1 deadline that imposes a paperwork burden. By that date under theAffordable Care Act, most employers are required to provide a notice to each employee explaining their options available under the law.

Here are answers to questions employers are asking about the notice requirement.

The Obama administration announced on September 26 that the small business health exchanges, operated by the federal government, will not open for online enrollment until November 1 (rather than October 1). Applications can still be made by mail, phone or fax starting on October 1.

What Information Must Be Included in the Notices?
The written notice must:

1. Inform employees of the existence of the "Health Insurance Marketplace," and include a description of the services it provides and how employees can contact the Marketplace to request assistance.

2. If the employer plan's share of the total allowed cost of benefits provided under the plan is less than 60 percent of such costs, inform the employee that he or she may be eligible for a premium federal tax credit if the employee purchases a qualified health plan through the Marketplace.


2. If the employer plan's share of the total allowed cost of benefits provided under the plan is less than 60 percent of such costs, inform the employee that he or she may be eligible for a premium federal tax credit if the employee purchases a qualified health plan through the Marketplace.

3. Inform the employee that if he or she purchases a qualified health plan through the Marketplace, he or she may lose the employer contribution (if any) to any health benefits plan offered by the employer. In addition, all or a portion of such contribution may be excludable from income for federal income tax purposes.

Which Employers Must Send the Notices?

The notice requirement must be met by employers that are required to comply with the Fair Labor Standards Act (FLSA). In general, the FLSA applies to employers with one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies.

The FLSA also specifically covers the following: hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; as well as federal, state and local government agencies.

Is there a Fine if an Employer Doesn't Send the Notices?

According to the Department of Labor (DOL), there is "no fine or penalty under the law" for failing to provide the notices. However, the Affordable Care Act is intertwined with other laws (this particular provision is embedded in the FLSA in a new section, 8A), so it's a good idea to comply to avoid possible legal complications.

Who Should Receive the Notices?

Notices must be given to all employees, whether or not they work full time, and regardless of whether they are currently receiving health benefits. By October 1, you must give these notices to all employees. After October 1, the notices must be given to new hires within two weeks of coming on board.

How Should Employers Send Them?

The notices must "be provided in writing in a manner calculated to be understood by the average employee," the DOL states in Technical Release 2013-02. They can be sent by first-class mail and can also be provided via e-mail, but only if employees access e-mail as an "integral part" of their duties and can access the messages easily.

Is there a Standard Notice Employers Can Use?

The DOL has issued a pair of model notices you can use (but they are not required).

• One is for employers that currently offer health benefits. Here is the link:http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf .
• Another is for employers without plans. Here is the link:http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf .

On Part B of the forms, you will see information employees will need if they plan to purchase coverage on the exchange, assuming they are eligible.

The Part B information is needed by employees who apply to their state's exchange (or the federal version, if no state-run exchange exists). They must complete a required questionnaire to determine their eligibility.
On Part B of the model notice for employers that do currently offer health coverage, there are several blank spaces requesting information about the health plan. Since the law doesn't actually require you to provide the information, and because some of the information may be hard to dig up, some legal advisors say that employers may decide to disregard some or all of Part B, especially if the information is uncertain or likely to change.

Can another Party Send the Notices on Behalf of an Employer?
The DOL stated on its website that an employer can satisfy its obligation to provide notices if another party, such as a third-party administrator or multi-employer plan, sends out notices on its behalf.

Do You Satisfy the "Bronze Standard?"
One question in Part B asks whether your organization provides health benefits that meet the ACA's minimum value test. In other words, does your plan lives up to the standard for a bronze plan? This information is also essential for determining whether you are "playing" or will instead need to "pay" when the delayed requirement takes effect in 2015. It also determines whether employees are eligible to get coverage through the exchange.
In May, the Department of Health and Human Services issued proposed regulations (not yet finalized, but the best guidance available so far) on the subject. Individual states may set some standards of their own.
Here are three safe harbors:

• A plan with a $3,500 integrated medical and drug deductible, 80 percent plan cost sharing, and a $6,000 maximum out-of-pocket limit for employee cost-sharing.
• A plan with a $4,500 integrated medical and drug deductible, 70 percent plan cost sharing, a $6,400 maximum out-of-pocket limit, and a $500 employer contribution to an HSA.
• A plan with a $3,500 medical deductible, $0 drug deductible, 60 percent plan medical expense cost-sharing, 75 percent plan drug cost-sharing, a $6,400 maximum out-of-pocket limit, and drug co-pays of $10/$20/$50 for the first, second and third prescription drug tiers, with 75 percent coinsurance for specialty drugs.

Possible Employee Public Relations Opportunity

If it turns out the plan your organization is already offering exceeds the bronze standard (making it a silver, gold, or platinum plan), consider informing employees to help them appreciate the benefit they're receiving. Taking advantage of this employee public relations opportunity can counter any lingering doubts or speculation by some employees about the coverage you are offering them.