Health Care Reform: Exchange Notices – Reminder

The ACA requires employers to provide all new hires and current employees with a written notice about the ACA’s Exchanges, which the Department of Labor (DOL) calls the “Notice to Employees of Coverage Options.” This requirement is found in Section 18B of the Fair Labor Standards Act (FLSA). Employers were generally required to begin providing employees with an Exchange Notice by Oct. 1, 2013.

On May 8, 2013, the DOL released Technical Release 2013-02 to provide temporary guidance on the requirement to provide employees with a notice about the Exchanges. In connection with this guidance, the DOL released Model Notices to Employees of Coverage Options for employers to use to satisfy the Exchange Notice requirement. The DOL’s guidance also includes a new COBRA model election notice, which has been updated to include information regarding health coverage alternatives offered through the Exchanges.

On Sept. 11, 2013, the DOL issued a frequently asked question (FAQ) announcing that there is no fine or penalty under the ACA for failing to provide the Exchange Notice. This means that employers cannot be fined for failing to provide employees with notice about the ACA’s Exchanges.

Compliance Deadlines

Employers must provide the Exchange Notice to both new hires and current employees as follows:

  • New Hires—Employers must provide the notice to each new employee at the time of hiring, beginning Oct. 1, 2013. For 2014, the DOL 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.
  • Current Employees—With respect to employees who are current employees before Oct. 1, 2013, employers were required to provide the notice no later than Oct. 1, 2013.

There is no requirement to provide the Exchange Notice to current employees on an annual basis. However, this is a continuing requirement, because the notice must be provided to each new employee at the time of hiring.

Method of Providing Notice

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. However, no particular method of providing the notice is specifically required (for example, by mail, hand delivery or electronically).

The DOL has stated that the notice may be provided by first-class mail. Alternatively, it may be provided electronically if the DOL’s electronic disclosure safe harbor requirements are met. This safe harbor allows plan administrators to send certain disclosures electronically to:

  • Employees with work-related computer access; and
  • Other plan participants and beneficiaries who consent to receive disclosures electronically.

The safe harbor does not require the use of any specific form of electronic media. However, plan administrators are required to use measures reasonably calculated to ensure actual receipt of the material by plan participants and beneficiaries. Merely placing a disclosure on a company website available to employees will not by itself satisfy this disclosure requirement.

DISCLOSURE

The information provided herein is intended solely for the use of our clients. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher or Publishers of articles within.

The information provided is for informational purposes only and does not constitute legal advice. The information above contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation or requirement. Depending on the specific facts of any situation, there may be additional or different requirements. This is to be used only as a guide and not as a definitive description of your compliance obligations.