Mandatory Exchange/Marketplace Notices to Employees Finally Issued
Thom: Can you tell me what the status is on “Notice to Employees of Coverage Options” model notice”?
Josie: On May 8th, model notices (one for employers who do offer health benefits to employees and one for employers that do NOT offer health plans to employees) as well as temporary guidance were issued.
Thom: What is the purpose of the notice?
Josie: Beginning January 1, 2014, individuals and employees of small businesses will have a new option to buy affordable health coverage through a new state or federally regulated private health insurance market (formerly, the "exchange"). The Marketplace will theoretically offer one-stop shopping for health insurance options. Since open enrollment for participation in the Marketplace begins in October 2013, the notices are an important way for employees to be aware of and learn more about the Marketplace.
Thom: How does this notice requirement fit in with the other employer administrative requirements under the Patient Protection and Affordable Care Act?
Josie: Employers can now add this to their already long (and increasing) list of "things to do" relating to healthcare reform. In addition to more reporting requirements, tracking of part-time and variable hour employees, just to name a few, employers have the additional responsibility to distribute the notice to all current employees by October 1, 2013 and to each employee hired after the initial distribution going forward. Thus, the notice must be included in every new-hire packet of materials. Keep in mind that the notice requirement applies with respect to all employees regardless of whether the employee is full-time, part-time, eligible, enrolled, or ineligible for coverage under the employer sponsored health plan.
Thom: What kind of information is included in the notice?
Josie: The Marketplace Notices have various requirements of what content must be included regarding the existence of the Marketplace, such as a description of the services provided by the Marketplace, how to contact the Marketplace, information relating to premium tax credits, a statement informing the employee that if the employee purchases a qualified health 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 such contribution may be excludable from income for Federal income tax purposes. This means that employers cannot make up their own notices to distribute although an employer can alter the model notices as long as certain requirements are satisfied.
Thom: How do employers get this information out to their employees?
Josie: As with other DOL ERISA notices, the notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically, if the requirements of the Department of Labor’s electronic disclosure safe harbor rules are met. The notice is required to be provided automatically, free of charge.
Thom: What are the timing requirements to get this information out to employees?
Josie: Employers must provide the notice to current employees before October 1, 2013. In addition, employers must provide the notice to each new employee upon hire. The DOL will consider a notice to be provided at the time of hire if the notice is provided within 14 days of an employee’s start date.
Thom: How do you see the Exchanges/Market place playing out in the near future?
Josie: In the end, one of the goals of the Patient Protection and Affordable Care Act is expanding access to health coverage and the Exchange or Marketplace is the means by which to accomplish this. It remains to be seen whether the Marketplace, whether run by the state or the federal government, will be up and running in time. Less than half of the states are going to run their own marketplace, approximately half are letting the federal government run their marketplace and a handful have decided to partner up with the federal government. Once the exchanges/marketplace is up and running, which is in and of itself a monumental task, the next hurdle will be educating consumers so that they actually understand how it all works. Too many options will be confusing, not enough options will be too limiting. If the marketplace is not sufficiently user friendly, then unfortunately, the goal of "access" will remain unattainable.
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