Notice of Exchange Availability
September 5, 2013
The Affordable Care Act (ACA) requires that employers provide all employees with a written notice about the Exchanges which are also known as Health Insurance Marketplaces. Employers are required to provide this notice to all current employees no later than October 1, 2013. The notice must also be provided to each new employee at the time of hiring beginning October 1, 2013.
WHO MUST RECEIVE A NOTICE?
Employers must provide the Exchange notice to each employee, regardless of plan enrollment status or of part-time or full-time status. 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 may also consider sending the notice to those enrolled in COBRA and any retirees that may be covered on the plan.
WHAT IS THE NOTICE THAT IS REQUIRED TO BE SENT?
The DOL has provided a model notice, a copy of which is attached. Employers are not required to use the model notice, provided the notice meets the content requirements (listed below). A cover letter for the notice is not required.
WHAT ARE THE CONTENT REQUIREMENTS OF THE NOTICE?
- Informing the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace 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 the Marketplace; and
- If the employee purchases a qualified health plan through the Marketplace, 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 required minimum content is found in Part A of page 1 of the DOL model notice that is attached. Employers who choose to use the model notice are required to provide at least the first page of the model notice or its equivalent. Employers may wish to provide Part B found on page 2 of the model notice as this information may be needed by employees who apply for exchange coverage, but it is not mandatory to provide this page. Page 3 of the model notice is optional for employers and does not have to be provided.
METHODS OF PROVIDING NOTICE
The notice is required to be provided automatically, free of charge. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the DOL’s electronic disclosure safe harbor are met. This safe harbor allows plan administrators to send certain disclosures electronically to:
- Employees with work-related computer access; and
- Other plan participants and beneficiaries who consent to receive disclosures electronically.
The safe harbor does not require the use of any specific form of electronic media. However, plan administrators are required to use measures reasonably calculated to ensure actual receipt of the material by plan participants and beneficiaries. Merely placing a disclosure on a company website available to employees will not by itself satisfy this disclosure requirement.
WHAT IS THE DEADLINE FOR PROVIDING THE NOTICE?
- Current Employees & COBRA participants – With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice no later than October 1, 2013.
- New Hires – Employers must provide the notice to each new employee at the time of hiring beginning October 1, 2013. The DOL will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.
Additional information on the Notice can be found HERE.
To download a sample Notice of Exchange Availibility, click HERE.
CONTACT US IF YOU HAVE QUESTIONS
We will continue to keep our clients informed as further information becomes available. If you have questions, please contact your Cottingham & Butler representative.