Employers Receive Additional Time to Provide Exchange Notice to Employees

March 1st Deadline Pushed Back to Late Summer/Early Fall

As most are aware, 2013 is an important transition year when it comes to complying with the Affordable Care Act. Larger employers (50+ full-time employees, or the equivalent) need to get ready to comply with the new "employer mandate" obligations being imposed on them, while all individuals (whether or not employed) need to begin to understand how the new state-based Health Insurance Exchanges ("Exchanges") work and how to shop for -- and buy -- coverage being offered through the Exchanges. To help educate individuals on how the new Exchanges work, the Affordable Care Act generally requires all employers -- not just the larger ones -- to provide notices to all their employees regarding the upcoming Exchanges. An employer that fails to comply with this new requirement, which originally was scheduled to take effect March 1, 2013, will violate the federal wage-and-hour law known as the Fair Labor Standards Act ("FLSA").

On January 24, 2013, the Departments of Labor ("DOL"), Health and Human Services ("HHS") and the Treasury jointly published guidance [FAQs About Affordable Care Act Implementation (Part XI)], which, among other things, extended the March 1, 2013, deadline that employers have for providing employees with written notice regarding coverage options available through Exchanges. The new deadline has not been set, but the DOL expects it to be late summer or fall of 2013, which, according to the DOL, "will coordinate with the open enrollment period for Exchanges." Pursuant to Section 18B of the FLSA, among other things, the written notice to employees must:

  • inform employees about the Exchanges;
  • describe the Exchange services;
  • provide contact information for the Exchanges;
  • where the employer's plan pays less than 60% covered costs, inform employees of the potential for premium tax credits and cost sharing reductions for qualified health plan coverage purchased through the Exchanges; and
  • inform employees that if they purchase qualified health plan coverage through the Exchanges, they may lose any employer contributions that may be excludable from Federal income taxes.

At this time, the DOL is considering providing model language or permitting the use of a template. Future guidance should provide flexibility and adequate time to comply.

For more information, please contact John J. McGowan at 216.861.7475 or jmcgowan@bakerlaw.com, Jennifer A. Mills at 216.861.7874 or jmills@bakerlaw.com or Susan Whittaker Hughes at 216.861.7841 or shughes@bakerlaw.com.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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