Original content from United Benefit Advisors
Q1. Who needs to give the notice?
A1. All employers who are subject to the Fair Labor Standards Act (FLSA) must give the notice. This includes:
- All hospitals, nursing homes and other health care facilities regardless of size.
- All public and private preschools, elementary and secondary schools, and institutions of higher education, regardless of size.
- All governments and governmental agencies, regardless of size.
- All other entities with $500,000 or more in annual dollar volume.
A2. The notice must be given to all employees, including temporary, seasonal, part-time, and full-time workers. It does not matter if the worker is not eligible for coverage under the health plan sponsored by the employer, and never will be eligible. The notice must be given to employees covered by a union or multiemployer plan. The notice does not need to be given to COBRA participants, retirees, or dependents.
A3. The notice is due by Oct. 1, 2013, but may be given before that date. If given earlier, employees hired after that date need to be given the notice within 14 days after their start date.
A4. The notice may be provided electronically to employees who routinely use a computer as part of their job. The employer may not simply post the notice on its website.
A5. The notice can be sent to the employee’s home or work address by first class mail. The instructions for providing the notice do not mention hand delivery, but that normally is an acceptable way to provide a notice, and should be acceptable for this notice. Simply posting the notice in a break room will not be adequate, however.
A6. No. An employer could, for example, provide the notice electronically to home office employees who use computers as part of their jobs and mail the notice to employees working on an assembly line.
A7. According to the DOL Technical Release, individualized notices are not required. As a practical matter, however, if the employer chooses to complete part 3, the notice will need to be individually prepared.
A8. The DOL instructions for the exchange notice do not address this question. Generally speaking, if a significant portion of the workforce is only literate in a language other than English, those employees should be provided a notice in the language they do speak and read. “Significant” often means 10 percent or more.
A9. The model notice is intended to cover information the law says the notice must include.
A10. The delay in the employer shared responsibility/play or pay requirements did not remove or change the requirement to provide this notice. The requested information about whether the plan offers affordable, minimum value coverage will be used by the marketplace as part of its determination of whether an individual is eligible for a premium subsidy. (Regardless of how this page is completed, the person will be required to provide information about eligibility for employer-provided affordable, minimum value coverage when applying for the premium subsidy.
A11. The employer information in the shaded area is information the employee will be asked to provide when applying for a premium subsidy through the marketplace.
A12. The Department of Health and Human Services (HHS) has provided a calculator for employers to use to determine whether their plan meets the “minimum value” standard. If the employer is a small (fewer than 50 employees) fully insured group, the employer should use the “actuarial value” calculator. If the employer is a large (more than 50 employees) fully insured group or self-funded, it should use the “minimum value” calculator. To access the calculators go to Ensuring the Affordable Care Act Serves the American People. Links to the calculators are in the Updates section of that page, under June 17, 2013.
a) A plan with a $3,500 integrated medical and drug deductible, 80 percent plan cost-sharing, and a $6,000 maximum out-of-pocket limit for employee cost-sharing.
b) A plan with a $4,500 integrated medical and drug deductible, 70 percent plan cost-sharing, a $6,400 maximum out-of-pocket limit, and a $500 employer contribution to a health savings account (HSA).
c) A plan with a $3,500 medical deductible, $0 drug deductible, 60 percent plan medical expense cost-sharing, 75 percent plan drug cost-sharing, a $6,400 maximum out-of-pocket limit, and drug co-pays of $10/$20/$50 for the first, second and third prescription drug tiers, with 75 percent coinsurance for specialty drugs.
A13. Employers should use one of the affordability safe harbors under the employer shared responsibility/play or pay regulations. The safe harbors are:
a) W-2 (Box 1) income
b) Rate of pay
c) Federal Poverty Level
A14. The employer can assume everyone is a non-smoker.
A15. The employer should assume no one qualifies for a wellness incentive.
A17. The employer has a choice:
a) Assuming the plan provides minimum value (and most employer plans do) the employer can provide a version of the notice that has the fifth box checked to employees for whom coverage is affordable, and a version that has the fifth box blank to employees for whom coverage is not affordable; or
b) The employer can provide the same notice for all employees, check the fifth box, and add an asterisk with the following language: “This plan may not be affordable for employees earning less than $_________” (for example, $18,000 annually).
A18. The employer should complete the notice based on the current benefit package.
A19. The employer will not be required to provide an updated notice. It could probably provide an updated notice if it chose to.
A20. This appears to be a one-time notice (as part of the effort to educate people that the opportunity to enroll in the marketplace is coming and how employer and marketplace coverage interact). If that assumption is correct, presumably the requirement will expire once the initial open enrollment for the marketplace expires on March 31, 2014.
A21. Employers are not required to complete page 3. This page does require employee-specific information that may make it impractical to complete for all employees by Oct. 1. An employer could omit page 3 for current employees but complete it for new hires going forward if it wished to.
A22. The DOL instructions are not specific on this, but it would seem reasonable to omit page 3 if it has not been completed.
A23. An employer may tailor the notice to reflect its particular situation as long as all of the key points are included. Employers may want to retain the general format in an effort to reduce the number of questions it may receive from the marketplace.
A24. Yes. At one time it looked like each state might need its own notice, but the DOL chose to reduce the burden on employers by directing all employees to the www.healthcare.gov website. This website will direct employees to a state-specific page for information about the marketplace in that state.
A26. Yes. Another entity, such as a union or insurer, may provide the notice on behalf of the employer. Because the notice requirement applies to all employees, the employer may be able to rely on a third party to provide the notice to some employees (such as those covered by a union plan), while providing the notice itself to others.
A27. The DOL has stated that there is no fine or penalty for failing to provide the marketplace notice. However, this requirement technically is still the law. The DOL FAQ may be accessed atFrequently Asked Question – Notice of Coverage Options.
A28. There is no reason to treat new hires differently than those employed when the notice is first given, so the notice should be provided to new hires.
A29. The model notices are at Patient Protection and Affordable Care Act (under Affordable Care Act Regulations and Guidance > Notice to Employees of Coverage Options).
A30. The DOL instructions are at Technical Release No. 2013-02.