Executive Summary

We received many questions on the notice about state-based health insurance marketplaces. This update is to make answers to those questions generally available. 1

Who Must Receive Notice?

  • Notices must be sent to all employees, including part-time employees.
  • Notices need not be sent to former employees, including employees on COBRA.

What employers must comply?

  • All employers covered by the federal Fair Labor Standards Act (FLSA) must send out the notice.
  • The FLSA sets out the Federal minimum wage. If you are required to pay the Federal minimum wage, you need to send out the notice.
  • Employers engaged in interstate commerce are subject to the FLSA. Generally, employers with one or more employees and more than $500,000 in revenue are covered by the FLSA.2 Some types of businesses – hospitals and schools are two examples – must comply with the FLSA regardless of revenue.

Timing

  • The notice must be distributed to existing employees on or before October 1, 2013.
  • Going forward, new employees must receive the notice within 14 days of the start of employment.

MBL Benefits Consulting Observation: Many employers are anxious to get these notices out now! We advise holding off until closer to the deadline. The notice is not due until October 1. Healthcare reform guidance is so fluid that additional guidance may become available before the deadline.

Our advice: line up the list of people to receive the notice, decide on the delivery method and prepare a draft notice; but hold off giving final notice until September 20 or so.

Delivery

  • The notice must be delivered by personal delivery, first class mail or email, provided certain requirements mentioned below are met.3
  • Although not required, if in-hand delivery is used, it is a best practice to have the employee sign acknowledging receipt. If the employee refuses, another can sign as a witness to the delivery.
  • The requirements that must be met for using email delivery are available at 29 CFR 2520.104b-1(c).4 Seriously oversimplified, employers need to be reasonably confident that email would be effective to deliver the notice and get the employee’s consent for electronic delivery.

Completing the Model Notice

Two U.S. Department of Labor model notices are available in both English and Spanish at: www.dol.gov/ebsa/healthreform.

  • One notice is for employers who do not offer a health plan and
  • The other is for employers who do offer a health plan to some or all employees.

The model notices are in fillable PDF format.

Here is a step-by-step guide to complete the notice:

  1. Part A, page 1. Insert the employer contact’s name in the “How to Get More Information?” section.
  2. Part B, page 2. Complete lines 3 through 12, which cover various pieces information about the employer. The numbering starts with “3”, by the way, so that it corresponds to the application forms being used by the health insurance marketplaces.
  3. Check the appropriate boxes on the bottom half of the page to indicate whether you offer
    • Health coverage to all or just some employees and
    • Coverage for dependents. If you do offer dependent coverage, you need to describe who qualifies as a dependent.
  4. Check the final box on page 2 if your plan
    • Is at least a bronze-level plan, which means that it meets “minimum value” requirements, and
    • The cost of the coverage is intended to be “affordable”.
  5. Page 3, questions 13 through 16. At this time, the questions on page 3 are optional. It collects information designed to assist employees with purchasing coverage on the marketplace. We anticipate that most employers will not be completing this section until the government provides more guidance and plans designed to meet post-2013 requirements have begun to be offered.

MBL Benefits Consulting Observation: This question about minimum value and affordability is the one that creates the most angst among our clients.

We anticipate that the plans we obtain for our clients will meet the minimum value requirements, so long as they offer drug coverage. Affordability, however, can vary from plan to plan.

Your MBL Benefits consultant is prepared to help you determine if this final box on page 2 can be checked.

For more information on these Marketplace Employee Notices, or on Health Care Reform generally, please contact your MBL Benefits Consulting, via your benefits consultant or by calling (212) 578-9667.

 

1The primary resource for information on the notices is DOL Technical Release No. 2013-02 http://www.dol.gov/ebsa/newsroom/tr13-02.html
2http://www.dol.gov/compliance/guide/minwage.htm#who
3http://www.law.cornell.edu/cfr/text/29/2520.104b-1
429 CFR 2520.104b-1(c) is also available at the link for endnote 2.

This update does not constitute legal or tax advice. Please consult with your legal, tax, and accounting advisers before applying this information to your fact-specific situation.

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