The Affordable Care Act requires all employers who are subject to FLSA to provide to all employees a notice of the Health Insurance Marketplace (a.k.a. Exchange) per the U.S. Department of Labor, Technical Release 2013-02, by October 1, 2013 and to all new hires within 14 days of their date of hire.
Under the statute, the notice must address the following items:
- The existence of the Marketplace, a description of services provided by the Marketplace, and contact information for the Marketplace
- That the employee may be eligible for a premium tax credit or other cost-sharing reduction if the employer-sponsored plan covers less than 60% of allowable claims (i.e., does not provide minimum value) and the employee purchases qualifying health coverage through the Marketplace
- That the employee may lose the tax-free contributions from the employer (if any) toward coverage offered through the employer’s plan if the employee purchases health coverage through the Marketplace
The Department of Labor has provided a model notice which employers can use and modify as needed. To assist you in this compliance requirement we have prepared a fact sheet for your information as well an FAQ which you may wish to share with employees along with the model notice.
Since the application for coverage and subsidies in the Marketplace requires employees to know several things about their employer sponsored plan, the model notice allows employers to provide the needed information in order to minimize employee questions later.
One of the questions which will be sure to come up is around the affordability test. In determining if a plan is deemed “affordable” an employer is allowed to consider the employee’s wages even though the actual test to qualify for a subsidy in the marketplace is based on the household income. An employer can consider the plan affordable if the employee’s share of premium for single coverage (regardless of how they are enrolled) is no more than 9.5% of the employee’s wages. Another safe harbor calculation uses the latest published Federal Poverty Level, which for 2013 is $11,490 for a 1 person household. If your employees pay less than $91/month for single coverage towards the lowest plan option, than you pass this affordability test.
We are prepared and happy to provide you with suggestions on how to complete the notice, provide you with guidance related to the affordability test and help you determine if your plan meets minimum value. In addition, please let us know if you would like us to send you a draft of a cover letter you can provide to employees in addition to the Notice and FAQ.