Healthcare Reform Alert: Obama Administration Sets October 1 Deadline for Employers to Distribute Insurance Exchange Notices
On May 8, 2013, the U.S. Department of Labor (DOL) issued Technical Release No. 2013-02, which contains important guidance for employers concerning their obligations under the healthcare reform law, the Affordable Care Act (ACA). Specifically, the release addresses employers’ responsibility to provide to all employees by October 1, 2013, certain information relating to the state-based (or federal-facilitated) private health insurance exchanges created by the ACA.
By way of background, the ACA requires, with limited exceptions, that employers provide to each employee (irrespective of part-time or enrollment status) a written notice informing the employee:
- of the existence of the exchange, including a description of the services provided by the exchange and certain contact information;
- that he or she may be entitled to receive a tax subsidy toward the purchase of a qualified health insurance policy through the exchange (if the employer’s group health plan fails to provide minimum value); and
- that, by purchasing a policy through the exchange, he or she may lose employer contributions (if any) to any health plan offered by the employer and that all or a portion of such contributions may be excludable from income for tax purposes.
On January 23, 2013, the DOL issued guidance stating that the employee notices would not be required to be distributed by the original March 1, 2013, deadline. Among other things, the Administration reasoned that employers would need more time to comply and that the timing of the notices should be coordinated with the exchanges’ open enrollment periods.
Now, as suggested above, the DOL has issued new guidance, which provides that such employee notices must be distributed to existing employees by October 1, 2013, and to any new employees hired thereafter. In order to facilitate this process, the DOL has issued model notice forms that employers may utilize (available at http://www.dol.gov/). One such model notice is available for employers that offer group health coverage, while the DOL also prepared another version for employers that do not offer a health plan. According to the guidance, the notices must be provided “in writing in a manner calculated to be understood by the average employee,” and may also be provided by first-class mail or electronically if certain DOL safe-harbors are satisfied.
Although the DOL’s latest guidance is styled as “temporary” and subject to future modification, it is clear that all employers (regardless of size) must prepare for the October 1, 2013, compliance deadline and separately, for applicable large employers, the January 1, 2014, compliance deadline to provide minimum essential health coverage to full-time employees and their dependents.
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