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Employers must provide health insurance exchange notice to employees by Oct. 1

All employers that are subject to the Fair Labor Standards Act (FLSA), whether they offer health insurance coverage for their employees or not, are required under the Affordable Care Act (ACA) to send notice by Oct. 1 to all employees about the Health Insurance Marketplace in their state. Also, starting Oct. 1 all new employees must receive the notice when they are hired.

The Health Insurance Marketplace, known as a state’s health insurance exchange, is a centralized location to find and compare private health plan options and information about subsidies that may be available for qualifying purchasers. Coverage for individuals and employees of small businesses obtained through the insurance exchanges will take effect Jan.1, 2014.

Open enrollment for the individual plans begins Oct. 1, which is why employers are required to provide the Health Insurance Marketplace notice by then.

Employers must provide a notice of coverage options to each employee, including full-time and part-time workers, regardless of whether or not the employee participates in a group health plan.

Although the federal government delayed implementation of the employer shared-responsibility requirement penalties (the ACA’s so-called “employer mandate”) until 2015, that does not affect an employer’s obligation to provide the health insurance exchange notice to employees by Oct. 1, 2013.

The primary purpose for the notice is to inform employees of their options. It must include:

  • Employer contact information
  • Information about the purpose of the Marketplace
  • Services provided by the Marketplace
  • Eligibility for a premium tax credit
  • Possible employer contribution exclusion

If employees choose to purchase a qualified health plan from the Marketplace, they might be eligible for a premium tax credit. However, they may lose employer health care contributions and related federal income tax exclusions.

To help employers comply with the notice requirement, the U.S. Department of Labor offers model language for notices on the website www.dol.gov/ebsa/healthreform. There is one model for employers that do not offer a group health plan and another model for employers that offer a group plan to some or all employees.

A helpful list of FAQs about the exchange notice requirement is available from the National Association of Health Underwriters at http://www.nahu.org/education/programs/compliance/flsanoticeFAQrevised.pdf.

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