Employees Must Notify Employees of Health Care Coverage Options

The Affordable Care Act requires most employers to notify employees in writing of their health insurance coverage options. Beginning on January 1, 2014 those options will include purchasing policies through the new Health Insurance Marketplace. The Marketplace is designed to allow individuals and employees of small businesses access to competitive private health insurance options. Open enrollment for health coverage through the Marketplace begins on October 1, 2013.

To satisfy the new requirements, employers must notify all current employees before open enrollment starts on October 1, 2013. Each new employee hired after October 1st must be notified within 14 days of the employee’s start date. The notice may be provided by first-class mail, or provided electronically if it meets the Employee Benefits Security Administration’s (EBSA) electronic disclosure safe harbor.

According to recently released technical guidance, the written notice must inform employees of the following:

  1. The existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
  2. If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code if the employee purchases a qualified health plan through the Marketplace; and
  3. 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 Employee Benefits Security Administration website provides two model notices employers can use to satisfy the requirements above, one for employers who offer a health plan and one for employers who do not offer a plan. Part A of the model notice is standard information for all employers however Part B contains specific information for each employer and its health

plans. The model notices will need to be filled out by employers and cannot be distributed “as is” to employees.

For more information and copies of the model notices visit the Employee Benefits Security Administration Website.

If you have any questions please contact Hertzbach & Company at 410-363-3200.