05 Sep Frequently Asked Questions about the Exchange Notice
Content originally from United Benefit Advisors
This FAQ is based on Department of Labor (DOL) Technical Release 2013-02, which does not provide specific guidance on many issues. Consequently, some of the answers in this FAQ are based on agency guidance provided in similar situations. The answers in this FAQ assume the employer is completing the model notice that applies to employers that offer coverage.
1. Who needs to give the notice?
All employers who are subject to the Fair Labor Standards Act (FLSA) must give the notice. This includes:
- All hospitals, nursing homes and other health care facilities regardless of size
- All public and private preschools, elementary and secondary schools, and institutions of higher education, regardless of size
- All governments and governmental agencies, regardless of size
- All other entities with $500,000 or more in annual dollar volume
Employers that are uncertain if they are subject to the FLSA may use the laws – Fair Labor Standards Act Advisor compliance tool. (The FLSA is the law that has the minimum wage and overtime requirements. If the employer pays minimum wage and overtime based on the FLSA rules, the organization has probably determined it is subject to the FLSA.)
The notice must be given to all employees, including temporary, seasonal, part-time, and full-time workers. It does not matter if the worker is not eligible for coverage under the health plan sponsored by the employer, and never will be eligible. The notice must be given to employees covered by a union or multiemployer plan. The notice does not need to be given to COBRA participants, retirees, or dependents.
The notice is due by Oct. 1, 2013, but may be given before that date. If given earlier, employees hired after that date need to be given the notice within 14 days after their start date.
The notice may be provided electronically to employees who routinely use a computer as part of their job. The employer may not simply post the notice on its website.
The notice can be sent to the employee’s home or work address by first class mail. The instructions for providing the notice do not mention hand delivery, but that normally is an acceptable way to provide a notice, and should be acceptable for this notice. Simply posting the notice in a break room will not be adequate, however.
No. An employer could, for example, provide the notice electronically to home office employees who use computers as part of their jobs and mail the notice to employees working on an assembly line.
According to the DOL Technical Release, individualized notices are not required. As a practical matter, however, if the employer chooses to complete part 3, the notice will need to be individually prepared.
The DOL instructions for the exchange notice do not address this question. Generally speaking, if a significant portion of the workforce is only literate in a language other than English, those employees should be provided a notice in the language they do speak and read. “Significant” often means 10 percent or more.
The model notice is intended to cover information the law says the notice must include.
The delay in the employer shared responsibility/play or pay requirements did not remove or change the requirement to provide this notice.
The employer information in the shaded area is information the employee will be asked to provide if he or she applies for a premium subsidy through the marketplace.
The Department of Health and Human Services (HHS) has provided a calculator for employers to use to determine whether their plan meets the “minimum value” standard. If the employer is a small (fewer than 50 employees) fully insured group, the employer should use the “actuarial value” calculator. If the employer is a large (more than 50 employees) fully insured group or self-funded, it should use the “minimum value” calculator. To access the calculators visit the Centers for Medicare & Medicaid Services (CMS) web page for Ensuring the Affordable Care Act Serves the American People. Links to the calculators are in the Updates section of that page, dated June 17, 2013.
- 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 a health savings account (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
Employers should use one of the affordability safe harbors under the employer shared responsibility/play or pay regulations. The safe harbors are:
- W-2 (Box 1) income
- Rate of pay
- Federal Poverty Level
The employer can assume everyone is a non-smoker.
The employer should assume no one qualifies for a wellness incentive.
The employer has a choice:
b) The employer can provide the same notice for all employees, check the fifth box, and add an asterisk with the following language: “This plan may not be affordable for employees earning less than $______” (for example, $18,000 annually).
The employer should complete the notice based on the current benefit package.
The employer will not be required to provide an updated notice. It could probably provide an updated notice if it chose to do so.
This appears to be a one-time notice (as part of the effort to educate people that the opportunity to enroll in the marketplace is coming and how employer and marketplace coverage interact).
Employers are not required to complete page 3. This page does require employee-specific information that may make it impractical to complete for all employees by Oct. 1. An employer could omit page 3 for current employees but complete it for new hires going forward if it wished to do so.
The DOL instructions are not specific on this, but it would seem reasonable to omit page 3 if it has not been completed.
An employer may tailor the notice to reflect its particular situation as long as all of the key points are included. Employers may want to retain the general format in an effort to reduce the number of questions it may receive from the marketplace.
Yes. At one time it looked like each state might need its own notice, but the DOL chose to reduce the burden on employers by directing all employees to the www.healthcare.gov website. This website will direct employees to a state-specific page for information about the marketplace in that state.
There is not a specific penalty for failing to provide the marketplace notice. However, PPACA and the FLSA have general penalties of $100 per day per person for failing to meet requirements.
The model notices are on the DOL website for the Patient Protection and Affordable Care Act (under Affordable Care Act Regulations and Guidance, Notice to Employees of Coverage Options).
The DOL instructions are at Technical Release No. 2013-02.