Obamacare Alert: Employers must provide notice of new health insurance exchanges

Starting today, virtually all employers—regardless of whether they provide employee health coverage—must provide employees with notice of the availability of the newly opened health insurance exchanges, as established by the Affordable Care Act (ACA).  Federal regulations require the notice to provide information on the following three items:

1. The existence of the exchanges, including a description of the services provided by the exchanges, and the manner in which an employee may contact the exchange to request assistance;
2. An explanation that employees may be eligible for a premium tax credit under section 36B of the Internal Revenue Code if the employer plan reimburses less than 60 percent an employee’s total allowable costs, and an employee purchases a qualified plan through an exchange; and
3. An explanation that employees who purchase a qualified plan through an exchange may lose their employer’s contribution 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.

The Department of Labor has provided has provided employers with sample notices that are available online at http://www.dol.gov/ebsa/healthreform/index.html (general information on the notices, with links to the samples). There are two notices available. Employers that provide a health plan should use the notice at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf. Employers who do not provide plans should use the notice at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf. Use of the appropriate model notice satisfies the ACA notice requirement.

While there are no immediate penalties for not providing the required notice, failure to do so may lead to bigger problems down the line, particularly if employees who do not receive notice about the exchanges are unhappy with coverage choices they make going forward, and claim that they were uninformed about their choices.  Accordingly, employers should endeavor to make the required notices available to employees immediately.