HNI Compliance Advisor
Attention all employers: An important Affordable Care Act (ACA) deadline is on the horizon. By no later than October 1, 2013, all employers must notify employees about the existence of the health care marketplace and provide marketplace contact information.
This deadline affects all employers, regardless of size, whether they ultimately will be subject to the ACA employer mandate, or whether they offer a health plan. A very limited deadline exception applies to employers that are not subject to the Fair Labor Standards Act. (The Department of Labor has a short online survey tool that enables employers to determine whether they are subject to the FLSA.)
Where We've Been: Health Care Reform So Far
The employer mandate (“pay or play”) provisions of the ACA have been delayed until 2015. But when it comes to the so-called individual mandate, there has been no corresponding delay. This means that most individuals in the U.S (with very limited exceptions) will be required, effective January 1, 2014, to maintain minimum essential health coverage for themselves and their dependents. If they do not maintain minimum coverage, they face a penalty to the IRS at tax time.
To ensure coverage for all people, the ACA calls for the creation of state- or federal-run exchanges — also called the marketplace — that will provide access to health care coverage. Depending on annual household income and other factors (we'll cover other factors in an upcoming blog!), some people also may be eligible for credits or subsidies that will reduce their out-of-pocket cost of buying coverage in the marketplace. The marketplace is scheduled to be available for open enrollment October 1, 2013, with coverage effective January 1, 2014.
For 2014, the annual penalty for people who do not maintain coverage is the greater of:
- 1% of the portion of household income that exceeds the tax filing threshold for the tax year — generally, for 2013, $10,000 for individuals and $20,000 for those married and filing jointly
- $95 per adult, plus $47.50 per child younger than 18 — not to exceed $285 per family
How the Deadline Affects Employers
With the passage of the ACA, the FLSA now requires all FLSA-covered employers to issue a notice, no later than October 1, 2013, to each of their employees. The purpose is to notify employees of the existence of the marketplace and to provide marketplace contact info. The notice must share:
- Information about the existence of the marketplace including a description of the services provided by the marketplace, and the manner in which the employee may contact the marketplace to request assistance
- Notification that 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, the employee may be eligible for a premium tax credit if the employee purchases coverage through the marketplace
- If an employee purchases coverage in the marketplace, the employee may lose the employer contribution [if any] to coverage offered by the employer and how that cost would have been excludable from tax
Model Notice [The Specifics]
The good news is that the DOL has issued model notices that are designed to fulfill the employer’s notice obligation. Here are two model notices [which are downloadable as PDF and Word files]:
- Model Notice for Employers That Offer Coverage [PDF 3 pages]
- Model Notice for Employers That Offer Coverage [Word]
- Model Notice for Employers That Do Not Offer Coverage [PDF 2 pages]
- Model Notice for Employers That Do Not Offer Coverage [Word]
- Employers are permitted to modify the model notice. Employers that change the model notice must ensure it contains all required elements.
- The three-page model notice [for Employers That Offer Coverage] does require customization for employer-specific information [bottom of Page 1 and Page 2]. This information may be entered directly in the model notice.
- Even though the employer mandate has been delayed, the model notice contains a check box [on Page 2] that communicates whether the plan covers more than 60% of costs and whether it is intended to be affordable. These factors may determine if an individual is eligible for subsidies for coverage purchased in the marketplace.
- The model notice for Employers That Offer Coverage includes information that is listed as "Optional." This is the employee specific information on Page 3. If you do not wish to provide a customized notice for each employee, consider removing Page 3. [If you choose to omit Page 3, delete the last sentence on Page 2 that refers to Page 3.]
Sharing the Notice: Who, When, and How
All employees must receive the notice, regardless of whether they are covered by the health plan or regardless of full-time or part-time or union status. Employers do not need to send separate notices to dependents of family members.
The notice needs to be delivered:
- To existing employees, on or before October 1, 2013.
- To newly hired employees, within 14 days of hire date.
Per Technical Release 2013-02, the notice should be delivered free to employees by:
- First class mail
- Electronically, as long as the electronic delivery meets the applicable DOL regulations under 29 CFR 2520.104b-1(c). The DOL has issued guidance about how notices may be electronically delivered in compliance with this regulation.
What Other Notices are Affected?
Because coverage on the marketplace will be an alternative to employees that are offered COBRA coverage, the DOL also has issued a revised COBRA notice that includes information about the availability of marketplace coverage. Employers subject to COBRA also should revise their COBRA notices.
Another Approaching Deadline: HIPAA Omnibus Rule
Unrelated to the ACA, there is an upcoming HIPAA compliance deadline for certain health plan sponsors. This deadline is September 23, 2013. The HIPAA Omnibus Rule, issued in January, may require certain employers to update privacy notices, business associate agreements, and HIPAA policies, procedures and forms.
This is most significant for employers that sponsor self-insured plans (including HRAs and FSAs). The Omnibus Rule has a variety of implications for “covered entities.” Legal counsel will help you determine exactly how the new HIPAA Omnibus Rule applies to your organization and what you need to do to ensure compliance. An HNI Relationship Manager also may help clear up compliance questions.