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Deadline Approaching for Employers to Provide Notice on Health Insurance Marketplace

The primary purpose of the Patient Protection and Affordable Care Act (ACA) is to expand access to affordable health coverage. The ACA is aimed at increasing the affordability and rate of health insurance coverage for Americans, and reducing the overall costs of healthcare for individuals and the government. In its simplest terms, everyone needs to have health insurance coverage or pay a fine. They can have health insurance coverage from their employer, or spouses employer, through an insurance policy they buy on their own (privately or using a Marketplace), or through a government-sponsored program like Medicare and Medicaid.

Central to this is the creation of new insurance exchanges. Every state will have an insurance exchange, or Health Insurance Marketplace. Some will be run by the state, others by the federal government or a combination of the two. Michigan will not run its own marketplace. The Act provides a number of mechanisms, including mandates, subsidies, and tax credits, to employers and individuals to increase the coverage rate and health insurance affordability.

Below are some key points that may help you understand the Act:

Employer health care reporting and mandate payments postponed until 2015.

On July 2, 2013, the Administration announced on the White House and Treasury websites that it will provide an additional year, until January 1, 2015, before the mandatory employer and insurer reporting requirements under the ACA begin. Since this will make it impractical to determine which employers do not provide minimum essential health coverage, and therefore would owe shared responsibility payments, transition relief is also being extended for those payments. Any employer shared responsibility payments will not apply until 2015.

The Congressional Research Service (CRS) has issued a report outlining the required functions of health insurance exchanges under the ACA.

Under the ACA, qualified individuals and small businesses will be able to purchase private health insurance through exchanges set up by states or by the federal Health & Human Services Agency (HHS). The initial open enrollment period for all exchanges will begin on October 1, 2013, and all exchanges are to be operational and offering coverage on January 1, 2014. Exchanges must carry out a number of functions, including determining eligibility and enrolling individuals in appropriate plans. In general, health plans offered through exchanges will provide comprehensive coverage and meet the private market reforms specified in the ACA. To make exchange coverage more affordable, qualifying individuals will receive premium assistance in the form of tax credits. Some recipients of these premium credits also may qualify to receive subsidies to help cover their cost-sharing expenses. The CRS report provides a detailed explanation of these exchanges, coverage offered through them, and the cost assistance features mentioned above.

Guidance on required employer notice on health care coverage options.

Beginning January 1, 2014, individuals and employees of small businesses will have access to affordable health care coverage through a new competitive private health insurance market called the “Health Insurance Marketplace” (the Marketplace). Certain employers must provide written notice to employees about health insurance coverage they offer, along with an explanation of the options available through the Marketplace. Employees then take this information to the Marketplace when they apply for insurance. The Department of Labor (DOL) has provided the following guidance on the notice requirement and has issued two model notices – one for those who provide health insurance coverage and the other for those who do not provide health insurance coverage. The model notices are on the DOL website under the Affordable Care Act section.

  • Who must provide notices. Notices must be provided by any employers to whom the Fair Labor Standards Act applies. Generally, this means an employer that employs one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, this rule doesn’t apply if they have less than $500,000 in annual dollar volume of business.
  • To whom must notices be provided. Employers must provide a notice to each employee, regardless of plan enrollment status (if applicable), or of part-time or full-time status. Employers do not have to provide a separate notice to dependents or other individuals who are, or may become, eligible for coverage under any available plan, but who are not employees.
  • Form and content of notice. The notice must be provided in writing in a manner calculated to be understood by the average employee. The notice must include information regarding the existence of a new Marketplace, as well as contact information and a description of the services provided by the Marketplace.
  • Timing and delivery of notice. Beginning October 1, 2013, employers must provide the notice to each new employee at the time of hiring. For 2014, a notice is considered to be provided at the time of hiring if it is provided within 14 days of an employee’s start date. For employees who are current employees before October 1, 2013, employers must provide the notice no later than October 1, 2013. In a September 11, 2013 publication on the DOL website, the DOL stated that employers covered by the Fair Labor Standards Act should provide a written notice to their employee about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

Please pay close attention to these common situations:

My insurance provider is taking care of the notice requirement for me. Be careful! Employers are required to send the notice to all employees. You should work with your provider to make sure all employees, not just plan participants, receive the notice.

My company provides health insurance to my employees. The DOL model notice is lengthy and I do not have time to fill out all of the information required. Remember, the individualized information requested on page 3 of the DOL model notice for employers who offer health coverage is optional.

I’m sure this requirement doesn’t apply to my small company. Don’t be so sure! As indicated above, the requirement applies to nearly all employers, large or small.

IRS Circular 230 Disclosure – As required by IRS rules, although this written communication may address certain tax issues, the issuer of this document, along with any attachments, did not intend nor write the advice to be used to avoid any penalty imposed by a taxing authority, nor may the user/recipient of this document use this document’s written tax advice for that purpose. Nor may it be used to promote, market or recommend to another party any transaction or matter addressed herein.