By Ken Berry
The common perception is that most of the key provisions included in the massive 2010 health care legislation – the Patient Protection and Affordable Care Act (PPACA), frequently referred to as "Obamacare" – take effect in 2014. But employers should be advised that other responsibilities and rights kick in before then. In particular, you should contact business clients regarding new disclosure requirements that must be met by October 1.
Under Obamacare, an employer must notify employers about the state-run insurance exchanges that will debut in 2014. This requirement applies to employers with at least $500,000 of annual revenue. Specifically, the notice must inform employees as to:
- The existence of the exchange;
- A description of the services provided by the exchange;
- How to contact the exchange to request assistance;
- The employee's potential eligibility for subsidized coverage on the exchange if the employer's group health plan doesn't provide "minimum value" (i.e., the plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs); and
- The fact that the employee may lose the employer contribution (if any) toward health insurance coverage if he or she chooses to purchase individual coverage on the exchange.
Employers may provide the notification by first-class mail. Alternatively, notice may be provided electronically, but only if the employer follows the DOL's electronic disclosure safe harbor. Generally, employees must have access to a work computer that is integral to their job duties. All other employees must affirmatively consent to electronic disclosures.
The revised deadline is October 1, 2013, for all current employees and new employees hired before that date. For employees hired after October 1, the employer must provide notice within fourteen days of the employee's start date.
To assist employers, the DOL has issued two "model" notices. One is for employers that sponsor a group health insurance plan and the other is for those that don't. Clients should generally be advised to use one of models. There are two parts to each model notice, Part A and Part B.
Part A provides general information about the exchange, its eligibility requirements for subsidies available for exchange coverage, and the initial open enrollment period. The model notice for employers that sponsor a plan also includes a blank entry for employers to provide how to contact the plan for more information about the employer-sponsored coverage.
Note that employees may be more likely to choose the subsidized exchange insurance coverage over the employer-sponsored health plan coverage after reading the notification. This could trigger the "pay or play" penalties for employers under Obamacare. It is important for employers to understand the technical application of the penalties.
Part B instructs employers to provide additional plan information that employees will need if they choose to apply for coverage on the exchange. In the model notice that applies to employers with group health plans, this part includes vital employer contact information, basic plan eligibility provisions for employees and dependents, and a statement as to whether the employer coverage is intended to be affordable and of minimum value.
The DOL notice contains other valuable information on the new notice requirements and coordination of Obamacare provisions with COBRA. Familiarize yourself with the rules before your contact your business clients.