October 1, 2013, is the deadline for U.S. employers to notify all of their employees (including part-time employees) of the availability of state health insurance "marketplaces," or exchanges. The notification requirement was added by Section 1512 of the Patient Protection and Affordable Care Act ("ACA") which added a new Section 18B to the Fair Labor Standards Act ("FLSA").
All employers that are subject to the FLSA are subject to this notice requirement. This includes hospitals, schools and institutions of higher learning, and federal, state and local government agencies. The exchange notice must be provided in writing and may be provided by first class mail or electronically if the requirements of the electronic delivery regulations of the U.S. Department of Labor ("DOL") are satisfied. The notice must inform the employee of the following:
- The existence of the marketplace, 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 if the employee purchases a plan through the marketplace.
- If the employee purchases a 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 the employer's contribution may be excludable from the employee's income for federal income tax purposes.
The DOL has provided two model notices on its website, one for employers that provide health insurance to their employees and one for employers that do not. Employers may customize the model notices, which contain additional information that the ACA does not specifically require.
Although the DOL's Employee Benefits Security Administration department ("EBSA") recently issued an FAQ which clarified that no fine or penalty will be imposed for failure to provide the exchange notice, EBSA officials have informally advised that employers should nonetheless comply with this requirement. They have cautioned that employers should not interpret the statement in the FAQ that there is no penalty under ERISA for failure to provide the exchange notice to mean there will be no adverse consequences if an employer fails to timely provide the exchange notice. In addition, the information in the exchange notice is crucial for employees in order to make a decision whether to enroll in coverage under an exchange or choose employer-provided coverage.
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