The Affordable Care Act provides individuals with the option of purchasing health coverage through new health insurance exchanges, or “Marketplaces” that will operate in every state effective January 1, 2014 (e.g., Connecticut’s “Access Health CT”).  The Affordable Care Act requires employers – whether or not they offer health care coverage – to provide employees with written notice of the new Marketplace coverage option by October 1, 2013.

Which Employers Must Provide the Notice.  In general, the notice requirement applies to businesses that employ one or more employees and have annual sales or receipts of $500,000 or more.  It also applies to hospitals, schools, and federal, state and local government agencies.  It is permissible for another entity (such as an insurance issuer, multi-employer plan, or third-party administrator) to send the notice of coverage options on behalf of an employer.

Information to Include:  The notice must include information on:

• Existence of the Marketplace;
• How to contact the Marketplace for assistance;
• A description of the Marketplace;
• Employee eligibility for a tax credit if the employee buys health insurance through the Marketplace and the employer does not offer health coverage at the level required by the Affordable Care Act;
• The loss of any employer contribution toward the cost an employee’s health coverage; and,
• The fact that payment for insurance purchased in the Marketplace is made on an after-tax basis.  Employer contributions and certain employee contributions are currently made on a pre-tax basis.

The U.S. Department of Labor (DOL) has issued two model notices located at http://www.dol.gov/ebsa/healthreform/index.html.  Part A of the model notices satisfies the notice requirement, while the information provided in Part B is optional.  Employers may use the applicable model notice or create their own notice as long as the notice includes the required information listed above.

Who Must Receive the Notice:  All employees must receive the notice regardless of their full- or part-time status and regardless of whether they are enrolled in the employer’s health plan.  Employers are not required to provide the notice to dependents, retirees, or other individuals who are or may become eligible for coverage but who are not employees. 

Due Date for Providing Notice:  The notice must be provided to each current employee no later than October 1, 2013, and to each employee hired after October 1, 2013 at the time of hire.  For 2014, the notice will be considered timely if provided within 14 days of an employee's start date. 

While the DOL has stated that there is no immediate financial penalty for failure to provide the Notice, negative consequences nevertheless could result from an employer's disregard of the federal law mandate. Therefore, employers are encouraged to provide the Notice.

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