Deadline For Distributing Notice of Exchanges & Subsidies

The Exchanges (or Marketplaces) are scheduled to open in the Fall of 2013. When this occurs, individuals may opt to shop in them for health insurance coverage. Some individuals may be eligible for a premium subsidy through the federal government. Whether an individual is eligible for a premium subsidy will depend in part on the coverage available to that individual through his or her employer. The Exchange/Marketplace needs to collect this information from the individual requesting a quote for coverage, and the federal government wants the individual to get that information from this Notice provided by the employer.

What is the deadline for distributing the Notice of Exchanges and Subsidies?
All employers are required to distribute the Notice of Exchanges and Subsidies by October 1, 2013. Then, for employees hired on or after October 1, the employer must supply the Notice at the time of hire. According the Department of Labor’s guidance, employers satisfy this obligation if they provide the Notice within 14 days after the new employee’s actual start date.

There are two Notices, which one should we use?
1. Click here to view the Notice for employers that do not offer an employer-sponsored health plan, and will also not be offering one in 2014.
2. Click here to view the Notice for employers who do offer an employer-sponsored health plan to some or all employees.

Regardless of an employee’s health insurance eligibility status, if you offer an employer-sponsored health plan you must use the Notice. The Notice obligation applies only to employers subject to the federal Fair Labor Standards Act (FLSA), which includes almost all U.S. employers. The FLSA applies to:

• Employees of any enterprise engaged in interstate commerce;
• Employees of any enterprise engaged in the production of goods for interstate commerce; or
• Employees of an enterprise with annual revenues exceeding $500,000.

We do not provide health insurance. Are we required to distribute the Notice of Exchanges and Subsidies to each employee?
Yes, you must provide the Notice for employers who do not sponsor a group health insurance plan. You are also required to provide the Notice to all W-2 employees, regardless of their status or classification. Notices must also be given to employees who are not eligible for our company-sponsored health insurance plan, but do not need to be provided to 1099 independent contractors who may contract with your company, nor to former employees who are currently enrolled in COBRA coverage.

Can you provide the Notices via e-mail?
Yes, however if you select this delivery method, you must comply with the requirements of the Department of Labor’s electronic disclosure safe harbor delineated in 29 CFR 2520.104b-1(c). Click here to review these requirements.

You may also mail the Notices or opt to hand-deliver them. While it is not required by statute, it is a best practice to require each employee to sign a form acknowledging receipt.

What if your employees have questions regarding whether they fines for not having insurance in 2014, how the Exchange/Marketplace will work, and other issues surrounding the individual mandate? Where do I direct them?
Direct the employee to the website listed in the Notice (HealthCare.gov). Also, you may want to direct the employee to their personal accounting/tax professional, as their tax professional would be in the best position to answer questions regarding whether the employee may be subject to an individual mandate fine or may be eligible for premium assistance. However, you may encourage the employee to take the Notice with him or her when consulting with a tax professional or going to the website, as the information provided by the employer in the Notice may affect the employee’s options.

How do you know if the health plan that we offer will meet the “minimum value standard?”
The best way to determine if your health plan meets the “minimum value standard” is to simply ask your health insurance broker or carrier. The “minimum value standard” refers exclusively to the health insurance plan design, not how much the employer contributes to the plan. In order to offer a health plan that satisfies this requirement, the health insurance carrier must pay for at least 60% of treatment costs, commonly referred to as a health plan with a 60% actuarial minimum value. In the coming months, you will probably hear this level of plan referred to as a “bronze level” plan. So we recommend simply asking your health plan broker or carrier if your health plan is a bronze level or richer plan.

According to the relevant guidelines, your plan offers “affordable” coverage if the company contributes a certain amount towards the employee-only premium cost. It is a common misconception that affordable coverage is determined by the employer contributing a specific percentage to each employee’s health insurance plan (such as 50%, 60% or 75%). Rather, affordable coverage means that the company contributes enough so that the employee’s portion of the premium for employee-only coverage is no more than 9.5% of the employee’s total household income. Since employers generally do not know an employee’s total household income, there is a safe harbor in place for 2014 stating that employees have access to “affordable coverage” as long as the employee’s portion of the premium for single coverage for a qualifying plan is equal to or less than 9.5% of the employee’s W-2 wages.

You may opt to create your own Notices in this regard as long as they comply with the numerous requirements delineated by the US Department of Labor (DOL). Should you opt to do so, we highly recommend having your legal counsel review it prior to distribution. The federal government will consider using the model Notices published by the DOL as good faith compliance with the Notice content requirements.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.