Action Items for Employers: Notice to Employees of Health Insurance Marketplace & Related Updates to COBRA Election Notices

As we have alerted you in the past, health care reform enacted in 2010 under the Patient Protection and Affordable Care Act (referred to herein as “PPACA”) has imposed new obligations on employers and group health plans. One such obligation on employers is to provide a notice to all employees regarding the upcoming availability of health insurance marketplaces beginning in 2014 (the “Notice”). The U.S. Department of Labor (“DOL”) has recently published guidance regarding employers’ compliance with this notice requirement and has also indicated that related changes to COBRA continuation coverage election notices may be needed to reflect the availability of health insurance marketplaces. Employers must act by October 1, 2013.

Overview of the Notice. The new Notice is intended to inform employees of health insurance coverage options and give information regarding the existence of new health insurance marketplaces—i.e., “exchanges”. It also serves to ensure that employees understand the trade-off when they give up employer-provided coverage and instead choose coverage under the health insurance marketplaces (e.g., loss of the employer contribution toward the cost of health plan benefits, which is usually provided on a tax-free basis).

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