Model Health Insurance Exchange Notice Issued by Department of Labor

Beginning January 1, 2014, individuals and small businesses will have access to health insurance through a public "exchange" or as it is now being referred to, a "Health Insurance Marketplace" ("Marketplace"). The ACA requires employers to notify employees of coverage options available through the Marketplace.

This notice was required to be sent by March 1, 2013, but the Department of Labor ("DOL")  announced a delay of the March deadline.   On May 8th the Department of Labor issued further preliminary guidance in response to a large amount of requests for any sort of model notice to be used to meet an October 1st 2013 deadline on delivery of the notice.  A summary of the Technical Release, Technical Release 2013-02, is below.  This memo will summarize who must provide the notice,  the general content required, provide links to the model notices,  and provide a summary of what employees must receive a notice and when.      

Who Must Provide the Notice?

Generally, any employer subject to the FLSA must provide the notice to their employees.  This encompasses the vast majority of companies.  If you are unsure whether or not FLSA applies to you the DOL has provided a compliance assistance tool, click here to access this tool. 

Content of Notice

The Notice must inform employees that:
1.  The Exchange is available;
2.  The employee may be eligible for a premium tax credit if the employer's plan share of the costs of benefits is less than 60 percent of costs; and
3.  The employee may lose the employer contribution for coverage if the employee purchases coverage through the Exchange (and that employer contribution may be excludible from income for tax purposes).

Model Notice of Exchanges

To satisfy these content requirements the DOL has provided  model language  on their webpage. The notice that employers provide will be dependent on whether the employer offers a health plan at the time the notice is delivered or whether they do not offer a health plan at the time the notice is delivered.   The model notices are available on the below links:

Model Notice for Employers Offering A Health Plan

Model Notice for Employers NOT Offering a Health Plan

Employers may use one of these models or a modified version, provided the notice meets the content requirements described above. It must be provided to each employee, regardless of plan-enrollment status or part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.

Timing of Exchange Notice

The requirement to issue the section 18B exchange notice to current and new employees was to take effect on March 1, 2013, but the DOL announced a delay in January (At that time, the DOL said it expected that exchange notices would be distributed in the late summer or fall of 2013, which would coincide with the open enrollment period for the exchanges.  Due to pressure from businesses, the DOL issued the model releases ahead of their previously indicated schedule.  These releases have been provided with the caveat that they are good through October 1, 2013 and that they may be subsequently amended.   The timing of delivery of the notices is dependent on whether you are providing the notice to new employees, or to current employees.  The rules are as follows:

  • NEW EMPLOYEES: Under the new guidance, beginning Oct. 1, 2013, employers will be required to provide the exchange notice to each new employee at the time of hiring. For 2014, the DOL will consider a notice to have been timely delivered if it's provided within 14 days of an employee's start date.
  • CURRENT EMPLOYEES: With respect to current workers, employers are required to provide the notice no later than Oct. 1, 2013. The notice must be provided automatically, free of charge, and written in language that the average employee can understand. It may be provided by first-class mail or electronically if the requirements of the DOL's electronic disclosure safe harbor are met.

This memo was created to provide a basic understanding of the requirements of the Model Notice of Exchange and to provide the links to access the model notices and the Technical Release governing the requirements

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