Employer's Mandatory Notice about Exchanges

As a result of the Patient Protection and Affordable Care Act (PPACA).  All employers subject to the Fair Labor Standards Act (FLSA) must send a notice to employees and new hires about the availability of health insurance exchanges and subsidies that might apply to them. 

Are you subject to FLSA?

Employers subject to FSLA employ one or more employees who are engaged in, or produce goods for, interstate commerce.  For most employers, a test of not less than $500,000 in annual dollar volume of business applies.  The FLSA also specifically covers the following entities: hospitals; institutions primarily engaged in the care of the sick, the 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; and federal, state and local government agencies.

If you are unsure if you are subject to the FSLA and would like to explore those rules further, you can access the appropriate information specifically on the Department of Labor’s (DOL) site by following this link: http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp

What the Notice Must Contain

You are required to let employees know that there will be a new health insurance marketplace and that they might be eligible for a premium tax credit if the employee purchases a qualified health plan through the marketplace and meet other eligibility requirements.  They must also be advised that they might lose any employer contribution to the cost of coverage (if any) to any health benefit plan offered by the employer. 

The Department of Labor has provided model notices for employers who offer a health plan to some or all of their employees and another notice for those who offer no health plan at all.  Employers will use only one notice.   Links to those notices are below. Spanish notices are also available.

Model Notice for Employers that Provide a Health Plan

Model Notice for Employers Without a Health Plan

Who Must Receive the Notice and When

The exchange notice must go to all employees, whether full-time, part-time, benefit eligible or not.  It does not need to be sent to former employees or those who are on COBRA or state continuation. There is no obligation to provide a notice to dependents.

The notices must be provided to all current employees, whether or not covered or eligible for the employer’s group plan, by October 1, 2013.  In addition, employers must provide the notice to all new employees at the time of hire beginning October 1, 2013.  This notice to new hires must be provided within 14 days of an employee’s start date. 

How to Distribute the Notice

The notice can be provided in writing, via first class mail or distributed by hand.  It can also be included with paychecks.  They can also be distributed electronically if the Department of Labor’s electronic disclosure safe harbor rules are met.  In summary those rules state:

The safe harbor applies to participants who have the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform his or her duties as an employee and with respect to whom access to the employer's or plan sponsor's electronic information system is an integral part of those duties.

More information on the electronic safe harbor rules can be found at http://www.dol.gov/ebsa/newsroom/tr11-03.htm.

How to Complete the Notice

The first page of the notice must be completed by the employer.  The second and third pages are optional.  Please note, the notice indicates that the third page is optional.  The requirements of the notice set forth by the PPACA are fulfilled by completion of the first page but employers who would like to complete the second and third pages may do so.

If you have any questions or would like to discuss this matter at all, please give me a call or email.  We continue to appreciate your business and hope we can assist you in adapting to this new healthcare landscape.

Sharon Z. Leonard                                     Dan Zeiler

sharon@zeiler.com                                         dan@zeiler.com

708/597-5900 x435                                                           708/597-5900 x134


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