Compliance Resources

Notice to Employees of Health Insurance Exchange Coverage Options

As part of the Patient Protection and Affordable Care Act (PPACA), all employers covered by the Fair Labor Standards Act (FLSA) are required to provide written notices of health exchanges to current employees no later than October 1, 2013.

For information on the Department of Labor’s (DOL) requirement for this notification, please click here.  This site includes information on the requirement and what needs to be included in the notice (sample notices are on the site) and how you may deliver it to your employees.

Who Must Comply

All employers who fall under the jurisdiction of the FLSA must provide written notice on health exchanges to all employees, full time and part time, regardless if they qualify for their employer’s health plan.  Employers only have to notify employees and not the employee’s dependents.  Employers covered under the FLSA are those that employ two are more individuals and have an annual dollar volume of business of $500,000 or more.  If you do not meet this qualification, but may meet any of the following, you may be covered by the FLSA:

Hospitals; institutions primarily engaged in the care of the sick, 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.

If you are unsure, the DOL’s Wage and Hour Division provides guidance relating to the applicability of the FLSA, in general, including an internet compliance assistance tool to determine applicability of the FLSA. See the DOL website for details. 

Delivery of Notice to Employees

You must provide the notice to your employees no later than October 1, 2013.  Employers must also provide the notice to new employees beginning October 1, 2013.  If you give the notice to new employees within 14 days of their start date you will be in compliance with the notification requirement.  You may provide the notice via hand delivery, first class mail, or electronically, provided the employer meets the DOL’s safe-harbor requirement for electronic delivery 29 CFR 2520.104b-1(c).

Form and Content of the Notice

Pursuant to the statute, the notice to inform employees of coverage options must include information regarding the existence of a new Marketplace as well as contact information and description of the services provided by a Marketplace.  The notice must also inform the employee that the employee may be eligible for a premium tax credit under section 36B of the Code if the employee purchases a qualified health plan through the Marketplace; and a statement informing the employee that 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.

There are model notices created by the U.S. Department of Labor for employers who presently offer health plans and for employers who presently do not offer health plans.  Both forms can be filled out online.  For employers who presently offer health plans, please keep in mind that page 3 of the notice is optional.

Penalty for Noncompliance

The DOL has issued guidance in the form of a FAQ clarifying that for the first year, there is no fine or penalty under the law for failing to provide the notice.

If you have any questions regarding the law or notification, please contact your human resource manager or an attorney.