Department of Labor Provides Updated Guidance on Notice of Exchange Required by PPACA

The Patient Protection and Affordable Care Act (PPACA) imposes a number of new obligations on New York and New Jersey employers. One of the most significant notification requirements involves the health insurance marketplaces that will be established in 2014.

After delaying the scheduled implementation of the Notice to Inform Employees of Coverage Options requirement, the Department of Labor recently announced a new compliance date of October 1, 2013 for these new obligations from the PPACA. It also released additional guidance and a model notice.

Changes made to the Fair Labor Standards Act (FLSA) pursuant to the PPACA require an applicable employer to provide each employee at the time of hiring, a written notice:

• Informing the employee of the existence of exchanges including a description of the services provided by the exchanges, and the manner in which the employee may contact exchanges to request assistance;
• If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through an exchange; and
• If the employee purchases a qualified health plan through an exchange, 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.

The DOL’s latest guidance highlights that all employers covered under the FLSA must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status. The notice to inform employees of coverage options must include information regarding the existence of a new Marketplace (this term replaces the term “Exchange”) as well as contact information and description of the services provided by a Marketplace.

As far as the new deadlines, employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. With respect to employees who are current employees before October 1, 2013, employers are also required to provide the notice not later than October 1, 2013.

There is one model for employers who do not offer a health plan and another model for employers who offer a health plan or some or all employees.