By Cynthia Stamer
Under the Patient Protection and Affordable Care Act (ACA), Group health plan sponsors are running out of time to finalize their 2014 plan designs. October 1, 2013, is an important deadline to let employees know about health care exchanges and the Summary of Benefits in the company’s plan.
It doesn’t matter if an employer sponsors a health plan or not, the employer must still let employees know about their options that kick in on January 1, 2014.
One of the biggest time constraints for finalizing 2014 plan designs, contracts and terms is the impending October 1, 2013 deadline for employers to provide the notice required by the Fair Labor Standards Act (FLSA).
All employers covered by the FLSA generally are required to inform employees about the new option beginning January 1, 2014 to get health care coverage through a health care exchange (now rebranded by the Obama Administration as a “Marketplace”).
Individuals and employees of small businesses will have the opportunity beginning October 1, 2013 to apply for and, beginning January 1, 2014, to buy health care coverage offered through the Marketplace established under ACA for their state. Open enrollment for health insurance coverage through the Marketplace begins October 1, 2013.
Employers are required to provide the Exchange Notice to each new employee at the time of hiring beginning October 1, 2013. 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 the start date.
For employees who started before October 1, 2013, employers must provide the Exchange Notice no later than that date.
The Exchange Notice content is fairly limited. The law requires that the Exchange Notice only dictate three required elements:
• Inform employees of coverage options, including information about the existence of the new Marketplace as well as contact information and description of the services provided by a Marketplace;
• Inform employees that they may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Marketplace; and
• Include a statement informing employees that if they purchase 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 excluded from income for Federal income tax purposes.
Employers should resist the urge to allow the shortness of the list of information required in the Exchange Notice to lure them into underestimating the time and effort required to prepare the Exchange Notification. For many employers, determining if the Health Plan provides Minimum Value can be time-consuming and complex. Minimum Value is roughly calculated as 60 percent of anticipated medical spending.
In addition to sending an Exchange Notice to employees, employers or their group health plan administrators also must notify COBRA-eligible or enrolled individuals.
Employers are also required to prepare and deliver a Summary of Benefits and Coverage (SBC) before the enrollment period starts. That pressures employers to finalize plan terms and contracts for 2014 as soon as possible. The SBC must disclose if the employer’s health plan provide Minimum Essential Coverage (MEC) and minimum value to employees to allow them to compare coverage and costs between the employer’s health plan and coverage through a Marketplace. Health plans can follow a required template for providing the SBC.
Employers also need to think ahead to ensure the plan can give the 60-day prior notice of any material reduction in benefits or services which is also now required for group health plans.
Employers must allow adequate lead time to properly finalize, adopt and communicate their 2014 health plan terms. Their preparations should ensure that necessary disclosures are made and that all disclosures are carefully prepared so that the notifications are consistent with plan terms.
Cynthia Stamer is a board certified labor & employment law attorney based in Plano. She specializes in employee benefit, HR and health care matters. http://www.cynthiastamer.com/
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