What is the ACA Exchange Notice Requirement?
The Patient Protection and Affordable Care Act of 2010 (“ACA”) amends the Fair Labor Standards Act (“FLSA”) to require employers of all sizes to provide their employees a notice of the availability of coverage through public health insurance exchanges by October 1, 2013.
Contents of the ACA exchange notice
The FLSA exchange notice must include a description of the existence of, and services provided by, public exchanges. That Act further requires that the notice:
- Inform employees that if they purchase a qualified health plan through the exchange, then they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of the employer contribution to employer-provided coverage may be excludable for federal income tax purposes;
- Explain how the employee may be eligible for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements;
- Include contact information for customer service resources within the exchange, and an explanation of appeal rights;
- Meet certain accessibility and readability requirements; and
- Be in writing.
Are all employers required to distribute the ACA Exchange notice?
The notice requirement applies to all employers who are subject to the FLSA. In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies. The FLSA also specifically covers the following entities, regardless of dollar volume of business: hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies. (For an explanation of the reach of the FLSA, please see http://www.dol.gov/compliance/guide/minwage.htm.)
Timing and Delivery of Notice
Under the heading “Timing and Delivery of Notice,” Technical Release No. 2013-02 provides as follows:
Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.
The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.
Delivery can be in hand or by first class mail. Delivery may also be made electronically under the Department of Labor’s “electronic disclosure safe harbor at 29 CFR 2520.104b-1(c).” The regulations at 29 CFR 2520.104b-1 provide a safe harbor under which electronic delivery is permitted to employees who have the ability to effectively access documents furnished in electronic form at any location where the employee is reasonably expected to perform duties as an employee and with respect to whom access to the employer’s or plan sponsor’s electronic information system is an integral part of those duties.
Enforcement
The Act does not appear to impose any separate penalty for ignoring the exchange notice requirement. The FLSA authorizes administrative actions, civil suits and criminal prosecutions for violations of pre-existing FLSA sections, but not, it seems, for this requirement. The Department of Labor published a FAQ Notice of Coverage Options on 9/11/2013 clearly stating that there is NO fine or penalty under the ACA for failing to provide the Marketplace notice. See Below
Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace?A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.The link to the DOL FAQ is: http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html
Waugh Agency, LLC is here to help:
Below are links to the model ACA exchange notice for Massachusetts domiciled companies with Massachusetts employees from the MA Health Connector, and a Federal version of the notice from the Department of Labor, for non-Massachusetts companies or Massachusetts companies with out of state employees.
Please contact Waugh Agency, LLC at 413-527-2738 to discuss any questions you might have.