Health Benefit Exchange Update: March 1, 2013 Notice of Coverage Options Requirement Delayed
Under Section 1512 of the Patient Protection and Affordable Care Act (PPACA), employers subject to the Fair Labor Standards Act (FLSA) are required to provide their employees with written notice of coverage options available through state health insurance Exchanges. This requirement, set for a March 1, 2013, implementation deadline, has been delayed pending review by the U.S. Department of Labor (DOL), which may expand the requirement’s provisions.
A Department of Health and Human Services (HHS) Question & Answer document provides clarification on this delay.
Why a Delay?
Employers and others have anxiously anticipated a model notice from the DOL as the effective date of the requirement is only a month away. The notice was to be issued in accordance with regulations promulgated by the DOL Secretary.
Perhaps an additional reason for the delay is that state health benefit Exchanges are not yet operational. While HHS has not indicated a revised date for the requirement to take effect, it does anticipate distribution of employer notices by late summer or fall of this year, just in time for Exchanges to go operational.
Important Notice Elements
The original Section 1512 notice mandated all employers subject to the FLSA to notify employees in writing regarding state health benefit Exchange options. This notice required the following information:
- Exchange Overview – To include a description of the services provided by the Exchanges and the manner in which the employee may contact Exchanges to request assistance.
- Premium Tax Credit Details – If the employer’s plan share of the total allowed costs of benefits provided under the plan is less than 60% of such costs, the employee may be eligible for a premium tax credit if that employee purchases a qualified health plan through an Exchange.
- Potential Loss of Employer Contribution – If the employee purchases a qualified health plan through an Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer. Further, all or a portion of such contribution may be excludable from income for Federal income tax purposes.
We will continue to monitor the regulations issued on this topic and will keep you up to date on any changes, model templates, and additional information.