Federal government issues updated guidance on employee health benefit exchange marketplace notice requirement
In January, the U.S. Department of Labor (DOL) issued guidance delaying when employers must notify employees about their state’s health benefit exchange marketplace and advance premium tax credits available through exchanges to help employees purchase individual coverage. The notice requirement, codified at Section 218b of the federal Fair Labor Standards Act of 1938, was to have been effective March 1, 2013, but DOL had not timely issued regulations making specific the notice requirements.
DOL issued updated guidance May 8 that requires employers to provide the notice to existing employees before October 1, 2013 and to newly hired employees at the time of hiring beginning October 1, 2013. For 2014, the DOL stated it will consider notice provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. DOL’s guidance states the notice “must be provided in writing in a manner calculated to be understood by the average employee,” and may be delivered electronically or by first-class mail.
The employee notice requirements, according to the latest guidance:
- Inform the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
- 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, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through the Marketplace; and
- If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
To aid employers in complying with the notice requirement, DOL developed two model notices:
- Model Notice for employers that offer a health plan to some or all employees
- Model Notice for employers that do not offer a health plan.
“The Department is issuing this temporary guidance and model notice in advance of the expected timeframe announced in the guidance because, since the issuance of the (January) guidance, the Department has received several requests from employers for a model notice on an earlier timeframe so that they may be able to inform their employees now about the upcoming coverage options through the (Exchange) Marketplace.”