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Remember to Send Out Obamacare Notice of Coverage Options by October 1, 2013

Under a new section of the Fair Labor Standards Act (“FLSA”) created by the Patient Protection and Affordable Care Act (“ACA”), employers subject to FLSA (which is almost all employers) must provide employees with notice of coverage options in the Health Insurance Marketplace.  In other words, employers must announce what insurance plans are available and what they cost.

Employers are required to provide notice to current employees by October 1, 2013.  For employees hired after October 1, 2013, employers must provide notice at the time of hiring.  For 2014, as long as the employer provides the notice within 14 days of the employee’s start date, the notice will be considered timely.

The notice must explain:

  1. The existence of the Marketplace (referred to in the statute as the Exchange and which is the place employees can go to purchase insurance on their own) including a description of the services provided by the Marketplace, and the manner in which employees may contact the Marketplace to request assistance;
  2. 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 under section 36B of the Internal Revenue Code if the employee purchases a qualified health plan through the Marketplace; and
  3. 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 may lose the ability to receive such a contribution on a tax free basis.

Employers should review the model notices issued by the DOL which are available at http://www.dol.gov/ebsa/healthreform/index.html.  While there is no fine or penalty for not providing this notice, we suggest employers comply nonetheless.

October 1, 2013 is also an important day because state-operated Marketplaces, including Connecticut’s Access Health CT, state partnership Marketplaces, and federally-operated Marketplaces, will be open for individual and small business enrollment.  Such enrollment will first become effective on January 1, 2014.  It will be interesting to see what products and prices emerge on these Marketplaces.

Brody and Associates regularly advises management on complying with the latest state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.