Advisory on Exchange (Marketplace) Notice and COBRA Notice May 13, 2013
Needed Guidance On Exchange (Marketplace) Notices Released
On May 8, 2013 the United States Department of Labor (DOL) released welcomed guidance (Technical Release No. 2013-02) about the “Exchange Notice” requirement under the Patient Protection and Affordable Care Act (ACA). The Technical Release included model notices and also included a new Model COBRA Qualified Event Notice that includes information for qualified beneficiaries about the availability of insurance and possible subsidies on the exchange, and addresses other ACA mandated changes.
Beginning January 1, 2014, the ACA requires states to establish an exchange (the federal regulators are now using the term “Marketplace”) through which insurance carriers will offer insurance coverage to individuals (and small businesses (under 100 or under 50 employees, depending on state law)). Prior guidance established that open enrollment for Marketplace coverage begins October 1, 2013.
Employers subject to the Fair Labor Standards Act (FLSA) must provide notice to employees of Marketplace coverage by October 1, 2013. In January 2013, the DOL issued guidance indicating that information on the Marketplace notice requirement would be delayed until late summer or fall of 2013. However, in response to request from employers for a model notice on an earlier timeframe, the DOL has decided to release Marketplace notices that can be used through 2013.
Notice to All Employees
The Technical Release requires employers to provide the Marketplace notice to all employees, regardless of plan enrollment or eligibility status or of part-time or full-time status. However, employers are not required to provide a separate notice to spouses or dependents eligible for coverage under the plan.
Form and Content of the Notice
The Marketplace notice must inform employees of the existence of the Marketplace as well as contact information and description of the services provided by a Marketplace. The notice must also inform the employee that the employee may be eligible for a premium tax credit (subsidy) if he or she does not have access to affordable coverage and purchases qualified coverage through the Marketplace. Employees must also be informed that the purchase of health coverage through a Marketplace will terminate eligibility for employer premium contributions (if any) to any health benefits plan offered by the employer and that all or a portion of those employer contributions may be excludable from the employee’s income for Federal income tax purposes.
There is one model for employers that do not offer a health plan and another model for employers who offer a health plan to some or all employees. Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.
Timing and Delivery of Notice
Employers are required to provide the new Marketplace notice to each current employee not later than October 1, 2013 and new employee on the start date or within 14 days of the start date.
Delivery is by first-class mail or in accordance with the DOL’s electronic disclosure requirements (found at 29 CFR 2520.104b-1(c)).
In addition to the information described above, the model Marketplace notice must include information employees will need to apply for coverage through a Marketplace, including:
- Employer name and Employer Identification Number
- Employer address and phone number
- The name, phone number and email address of an employer contact who can discuss employee health coverage with Marketplace officials
- Information about any health coverage offered by the employer, including whether health coverage is offered to some or all employees, eligibility criteria, and availability of dependent coverage
- Whether the employer coverage meets the ACA’s 60% minimum value standard, and whether the cost of this coverage to the employee meets the “affordability test” under the ACA
Updated COBRA Election Notice
Recognizing that the Marketplace will provide another option to COBRA qualified beneficiaries to obtain group health coverage, the Technical Release also provides an updated COBRA Continuation Coverage Election Notice that includes revisions reflecting these choices, and the availability of subsidies in the Marketplace for eligible individuals. The updated COBRA Continuation Coverage Election Notice also reflects changes mandated by the ACA’s prohibition on preexisting condition exclusions and eliminates the prior model language relating to the Health Coverage Tax Credit, which will expire as of January 1, 2014.
To access the Technical Release and notices go to:
DOL Technical Release No. 2013-02
Model Notice to Employees of Coverage Options (for employers who offer a health plan to some or all employees)
Model Notice to Employees of Coverage Options (for employers who do not offer a health plan)
Revised COBRA Continuation Coverage Election Notice
Additional information for employers regarding the Affordable Care Act is available at www.healthcare.gov and www.dol.gov/ebsa/healthreform.