On May 8, 2013, the Department of Labor (“DOL”) issued guidance to employers for giving notice to employees as required by Fair Labor Standards Act (“FLSA”) § 18b. Section 1512 of the Patient Protection and Affordable Care Act (“Affordable Care Act”) created § 18b to require that employers give employees notice of coverage options available through a Health Insurance Marketplace, also known as an Exchange.
Open enrollment for health insurance coverage through the Marketplace, which “offers ‘one-stop shopping’ to find and compare private health insurance options,” begins October 1, 2013. Although the notice requirements of § 18b were originally set to take effect on March 1, 2013, the date that notice will first be required has been pushed back. In Technical Release 2013-02, the DOL states that beginning October 1, 2013, employers will be required to give notice to each new employee at the time of hiring. The notice must be provided within 14 days of an employee’s start date. For employees who are employed before October 1, 2013, employers are required to provide the notice no later than October 1, 2013. The written notice must:
1. Inform “the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;”
2. Inform the employee that “[i]f the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the “Code”) if the employee purchases a qualified health plan through the Marketplace;” and
3. Inform the employee that if he or she “purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.”
The DOL states, “The notice must be provided in writing in a manner calculated to be understood by the average employee.” The notice may be provided by first-class mail or electronically, “if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.”
Who Must Give Notice?
The notice requirement of § 18b applies to all employers who are subject to the FLSA. According to the DOL, the FLSA generally applies to employers who “employ one or more employees who are engaged in, or produce goods for, interstate commerce.” For more information, see http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.
Who Must Receive Notice?
Employers must provide notice to each employee, regardless of whether the employee works full time or part time. Notice must be given regardless of plan enrollment status. Employers do not have to give separate notice to an employee’s dependents or other individuals who may be eligible for coverage under the plan.
Model Notice
Model language for the notice may be found at http://www.dol.gov/ebsa/healthreform.
Questions
If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.
Bruce A. Scheidt or David W. Tyra | 916.321.4500