Under Obamacare, employers subject to the Fair Labor Standards Act must provide a “Notice of Coverage Options” to each employee, whether full-time or part-time and regardless of whether the employer is covered by an employer health care plan. The purpose of this Notice is to inform employees that they may obtain health insurance through their state’s Health Insurance Marketplace. With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. For each new employee hired on or after October 1, 2013 the notice must be given at the time of hiring. For 2014, the Department of Labor will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.
Employers Subject to the Requirement
Generally, the Fair Labor Standards Act applies to employers that have annual sales or receipts of $500,000 or more. More information is available through the Department of Labor Wage-and-Hour Division’s FLSA compliance tool.
Content of the Notice
The Department of Labor (“DOL”) published temporary guidance on May 8, 2013 (Technical Release 2013-02) describing the content of the required Notice.
The Notice must inform each employee of the existence of a new Marketplace as well as contact information and a description of the services provided by the Marketplace. The notice must also inform the employee that the employee may be eligible for a premium tax credit under section 36B of the Code if the employee purchases a qualified health plan through the Marketplace; and a statement informing the employee that if the employee 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 Department of Labor proves a model Notice for employers that offer a health plan (Model Notice With Employer Plan) and a model Notice for employers that do not offer a health plan (Model Notice without Employer Plan). Employers may create there own version of the Notice provided that it meets the content requirements described above.
Delivering the Notice
The notice must be provided in writing, free of charge, in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor are met. Generally, those requirements are:
- actual receipt of transmitted information (e.g., using return-receipt or notice of undelivered electronic mail features, conducting periodic reviews or surveys to confirm receipt of the transmitted information);
- protection of the confidentiality of personal information relating to the individual’s accounts and benefits (e.g., incorporating into the system measures designed to preclude unauthorized receipt of or access to such information by individuals other than the individual for whom the information is intended);
- the electronically delivered documents must be prepared and furnished in a manner that is consistent with the style, format and content requirements applicable to the particular document (e.g., attaching a PDF version of a document to an email); and
- notice must be provided to the employee, in electronic or non-electronic form, at the time a document is furnished electronically, that apprises the individual of the significance of the document when it is not otherwise reasonably evident as transmitted (e.g., the attached document describes changes in the benefits provided by your plan) and of the right to request and obtain a paper version of such document.
Typically, electronic notices would be provided via the company email system.
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