The Affordable Care Act- Exchange Notice Compliance

TEKcareThe Affordable Care Act requires employers to notify all their employees including 1099, of the availability as of October 1st, 2013 for employees to enroll and purchase healthcare policies thru the respective state public marketplace exchange or for those states not implementing an exchange the “federally run” state exchange. Originally the notice was scheduled for March 2013, however in the DOL’s technical release No. 2013-02, the effective date of the notice is not later than October 1st, 2013 for current employees or within 14 days of an employee’s start date for employees hired after 10/1/13.

Fair Labor Standards Act Exchange Notice requirements;

  • 1) The notice must include a description of the existence of and services provided by public exchanges.
  • 2) The notice must be distributed to all employees; full-time, part-time, 1099. The notice does not need to be sent to dependents, former employees, or employees under COBRA coverage.
  • 3) Explain how the employee may be eligible for a premium tax credit or cost-sharing reduction
  • 4) Inform employees that if they purchase a qualified healthcare plan through the exchange, than
    they may lose any employer contribution toward the cost of employer paid coverage.
  • 5) Include contact information for customer service resources within the exchange, and an explanation of appeal rights
  • 6) Meet certain accessibility and readability requirements
  • 7) Be in writing in a manner to be understood by the average employee.

Notice deliver may be made by hand or by first class mail. Delivery can also be made electronically under the DOL’s “electronic disclosure safe harbor at 29 CFR 2520.104b-1(c)”

The ACA does not appear to impose any penalty for ignoring the exchange notice requirement. The FLSA authorizes administrative actions, civil suits, and criminal penalties for violations of pre-existing FLSA sections but apparently not currently for this requirement. Non-compliance is never a good idea and should not be considered a viable option. A lack of penalties may not translate into a lack of consequences. Under the ACA healthcare plans are now subject to ERISA rules, plan sponsors do have a fiduciary responsibility to be forthcoming with plan participants and beneficiaries, similarly to the rules governing summary plan descriptions. So while today exchange notices may not be technically required, there are good reasons to comply.

The DOL has released two model exchange notices for employers both of which can be found at the TEKCare website- www.tekcare.com. One notice is for employers who offer a health plan to some or all of their employees, and the other for employees who do not offer a health plan. Employers may want to complete the forms to avoid having to respond to inquiries from the public exchanges seeking to process an individual’s application.