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Employer Exchange Notice: DOL Guidance and Model Notice

A new technical release from the DOL provides important guidance for employers on the obligation to give employees a notice regarding health coverage available through the public exchanges.

Effective Date. As discussed in a prior post, this notice obligation was scheduled to become effective March 1, 2013, but was delayed until guidance was issued. Under this new guidance, notice must be given to all current employees by October 1, 2013, and must be given to each new employee hired on or after October 1, 2013, within 14 days of the start date.

Covered Employers. Although this notice requirement was enacted as part of health care reform, it applies to employers through the FLSA. So all employers to which the FLSA applies are required to provide the notice. It does not matter whether the employer offers health coverage to employees or whether the employer is subject to the play-or-pay mandates.

Who Gets the Notice? The notice must be given to all employees, whether full-time or part-time and whether or not covered under the employer's health insurance plan. However, notice is not required to be given to dependents or other individuals who may be covered under the employer's plan.

Content Requirements and Model Notice. The notice must provide employees with information about the public exchanges and inform them that they may be eligible for a tax credit to subsidize coverage obtained through the exchange. But the notice must also advise that employees who choose to obtain coverage through the exchange will lose any employer subsidy that is provided for employer-sponsored coverage.

The DOL has provided two model notices that may be used to satisfy the content requirement. One model is for employers without a health plan (here), and one model is for employers with a health plan (here). 

Impact on COBRA Election Notice. As part of this guidance, the DOL has updated its model COBRA election notice (the notice that must be distributed when an individual has a qualifying event) to include a discussion of coverage that may be available through the exchange. Employers and service providers that handle COBRA administration will want to update their election notices to conform to the new model language, since use of the model language is the only way to be deemed to comply with the COBRA notice content requirements.

Method of Delivering. The notice generally must be distributed in the same manner as ERISA-required disclosures (e.g., SPDs and COBRA notices). First class mail and hand delivery may be used. And employers may rely on the DOL's safe harbor for electronic distribution, which generally permits electronic distribution to employees who otherwise have access to email as an integral part of their work duties or to employees who consent to receive notice by email.

Bottom Line. We have been expecting these new rules, so they generally are not a surprise. But now that we know what's required, it's important for employers to begin planning for implementation. And keep in mind that compliance is required by October 1 of this year. It may not be sufficient to distribute the notices in connection with open enrollment or other plan-related communications.


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Don Berner, the Labor Law, OSHA, & Immigration Law Guy
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Boyd Byers, the General Employment Law Guy
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Jason Lacey, the Employee Benefits Guy
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