A fundamental feature of the Patient Protection and Affordable Care Act (“ACA” or “Act”) is the introduction of health care exchanges, or marketplaces, where individuals and small businesses may purchase “affordable” and qualified health benefit plans. As summer fades to fall, employers must mark one important date on their calendars to ensure compliance with the ACA: October 1, 2013. This date marks the first day of open enrollment for both the individual Health Insurance Marketplace (“Marketplace”); the Small Business Health Options Program (“SHOP”); and the deadline for covered employers to provide notices to their employees about the marketplaces and their coverage options.
Open Enrollment Begins
Open enrollment for the Marketplace and the SHOP begins on October 1, 2013. Earlier this month, the U.S. Department of Health and Human Services announced that individuals can now create personal accounts on the Healthcare.gov website (link) to begin the enrollment process, although applications for the Marketplace will not be available until open enrollment actually begins. The site provides a checklist for individuals to gather information to prepare for their applications, including the Employer Coverage form to collect information about their employers and any employer-provided health coverage available to the individual. Employers may be asked by their employees to complete the one-page form or to provide information necessary for the employee to complete the form, including whether the employee is eligible for coverage from the employer, whether spouses or dependents are also eligible, and details regarding the current plan. The Employer “Coverage Tool” mirrors some of the information an employer must provide in the new mandated notices to employees (discussed below); therefore, early compliance with the notice requirement will reduce or eliminate the number of individual requests for information from employees as October 1 nears.
The Department of Health and Human Services also recently announced the launch of a call center to serve small businesses interested in the SHOP. Under the ACA, employers with less than 50 full-time and full-time equivalent employees may use the SHOP to compare rates, coverage, and quality of health insurance plans to determine the best solution for their businesses and employees. Small employers are not required to provide insurance to their employees, nor are they subject to the shared responsibility payments applicable to large employers, but small businesses may elect to offer coverage to their employees through the SHOP. The SHOP Call Center is a new resource to help small businesses obtain information to make the best decisions for their employees. The Call Center is currently open on weekdays from 9 a.m. to 5 p.m. EST, with hours expanding after open enrollment begins on October 1.
Notice of Coverage Options
To facilitate the launch of the health insurance marketplaces, the ACA adds a new provision to the Fair Labor Standards Act (“FLSA”) requiring employers to give notice to employees of the coverage options available to them through the Marketplace. The deadline for providing the notice was originally March 1, 2013; however, the U.S. Department of Labor extended the deadline due to delays in establishing the Marketplace. Now employers must provide the notice to all current employees no later than October 1, 2013, the date open enrollment begins for the insurance exchanges. Employees hired after October 1, 2013 must also receive the notice at the time of hiring, although in 2014 the notice will be considered timely if provided within fourteen days of hiring.
All employers subject to the FLSA are required to provide a notice to each of their employees, regardless of status (full-time or part-time) or eligibility to enroll in a group health plan. The notice must be provided automatically, free of charge, in writing, and in a manner calculated to be understood by the average employee. (It is strongly suggested that a Spanish version of the notice may be appropriate in some workplaces.) The notice may be delivered by first-class mail or electronically in accordance with the Department of Labor’s electronic disclosure safe harbor regulations.
The Department of Labor recently issued two model employee notices, one for employers that do not offer a health plan and one for employers that do offer a health plan to some or all of their employees. Every notice must contain the following information:
- Inform the employee of the existence of the new Marketplace;
- Contact information and a description of the services offered by the Marketplace;
- A statement that the employee may be eligible to receive a premium tax credit if the employee purchases a qualified plan through the Marketplace; and
- A statement that, if the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer’s contribution to any health benefit plan offered by the employer, and that all or a portion of the contribution may be excluded from income for federal tax purposes.
The model notices also contain an explanation that the employee will not be eligible for a tax credit through the Marketplace if the employer offers the employee a plan that meets the affordability and “minimum value” standards of the ACA, but the employee may be eligible for the tax credit if the employer does not offer a health care plan or if the plan offered does not satisfy these ACA requirements.
The model notice for employers who do not offer employees a health care plan contains all of the above information, as well as information about the employer that the employee must supply on his or her application for coverage in the Marketplace.
The model notice for employers who do offer health coverage to some or all of their employees contains all of the information above, plus basic information about the health plan offered by the employer. The employer should indicate which types of employees are eligible for coverage, whether dependents are covered, and whether the plan meets the minimum value and affordability standards, based on employee wages. The model notice also includes an optional section that mirrors part of the Employer Coverage Tool form, which an individual will use to complete an application for the Marketplace, should he or she choose to investigate coverage through the Marketplace.
As October 1, 2013 is fast-approaching, every employer should prepare to distribute information to its employees regarding their coverage options.