As previously reported on this blog, employers are required to provide a notice to employees regarding coverage options under the new Health Insurance Marketplaces created by the Affordable Care Act that are scheduled to be up and running on October 1. The notice must be provided by October 1 to all employees, part-time and full-time, regardless of whether they have health coverage through their employer. New hires must receive the notice within 14 days of hire.
Employers were understandably confused when, on September 11, the DOL posted an FAQ on its website advising that employers would not be fined under the Fair Labor Standards Act for failing to distribute the notice, yet some DOL officials were quick to point out that penalties and other adverse consequences for non-compliance could follow under ERISA and other statutes. In light of this uncertainty, employers are wise to comply and provide the notice by October 1.
The U.S. Department of Labor ("DOL") has published sample notices at http://www.dol.gov/ebsa/healthreform/. The specific language in the DOL notices need not be used, however, so long as certain key points are included. Given the complexity of the topic, the DOL sample notices are likely to raise more questions than they answer. Many employers are tailoring the notice in a manner that they feel will be more understandable to their employees. Other employers are preparing supplemental handouts and scheduling employee group meetings to address the many questions that will likely arise. Much is uncertain about how the roll out of the Health Insurance Marketplaces will go on October 1; however, one thing is for certain: employees are likely to have many questions and misunderstandings regarding their options under the Affordable Care Act.
Based on questions and feedback we've been hearing from clients, here is our list of the "top five" questions you may hear from employees once the required notices are distributed (and suggested responses):
"Why am I receiving this notice?" You have probably heard news reports about "Obamacare" (aka "Healthcare Reform" or the "Affordable Care Act"). Under the law, employers must notify all employees of their ability to purchase their own coverage under new "Health Insurance Marketplaces" that will be open on October 1, 2013. The new Marketplaces do not impact your eligibility for coverage under the Company's health plan.
"Can I get coverage on the Health Insurance Marketplace if I find a plan there that's cheaper than my employer's plan?" Nearly anyone will be able to purchase coverage on the Marketplace; however, employees who are likely to find this advantageous are those who either do not have employer-provided coverage available to them or who pay a lot (more than 9.5% of income) for their coverage.
"Will I qualify for a tax subsidy if I purchase coverage on the Health Insurance Marketplace?" Employees who have affordable, minimum value coverage available to them through their employer will not qualify for a tax subsidy. If you are not eligible for coverage from an employer (or you pay more than 9.5% of your income to purchase coverage through your employer) you may qualify for a subsidy and you should explore your coverage options on the Marketplace.
"Is the health coverage I have through my employer 'affordable' and of 'minimum value'?" There are no short answers to these questions. However, as a rule of thumb, coverage through an employer is "affordable" if an employee does not pay more than 9.5% of his or her income for self-only coverage, and the coverage is "minimum value" if the plan's share of the total allowed benefit costs covered by the plan is no less than 60% of those costs.
"Haven't the individual mandate penalties been delayed until 2015?" No. Certain "shared responsibility" penalties that apply to large employers have been delayed until 2015; however, the individual mandate is scheduled to take effect on January 1, 2014. Individuals who do not obtain coverage may be subject to an annual penalty equivalent to the greater of $95 or 1% of their household income. The penalty amount will increase in subsequent years.
Employers are likely to receive more questions from employees regarding health coverage than ever before in the months following October 1, 2013. Of course, employees can always be referred to the feds for additional information (www.HealthCare.gov or 1-800-318-2596).