Despite continuing uncertainty surrounding how and when state and federal-run health insurance exchanges will be functioning, the United States Department of Labor (DOL) has not pushed back its original October 1, 2013 deadline for the required employer marketplace notice.
Required Marketplace Notice
The Patient Protection and Affordable Care Act (ACA) amended Section 18b of the Fair Labor Standards Act (FLSA) to include a requirement that employers notify employees about the availability of health insurance marketplaces (the Marketplace Notification Requirement).
As a provision of the FLSA, the Marketplace Notification Requirement only applies to employers who are otherwise required to comply with the FLSA. Generally, the FLSA “applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies.” See DOL Technical Release No. 2013-02.
Timing and Delivery of the Notice
In order to comply with the Marketplace Notification Requirement, the notice deadline is October 1, 2013 for current employees and within 14 days of an employee’s start date for all employees starting after October 1, 2013.
The notice can be sent out to all current full and part-time employees via first class mail, or subject to the DOL’s electronic safe harbor requirements, by electronics means such as email.
Content of the Notice
The guidelines provided by DOL require that the notice: (i) inform employees of health insurance coverage options, including information regarding the existence of health insurance marketplaces with contact information for and a description of the services provided by the applicable marketplace; (ii) inform the employee that he or she may be eligible for a premium tax credit if the employee purchases a qualified health plan through the marketplace; and (iii) include a statement informing the employee that if the employee purchases insurance 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.
See DOL Technical Release No. 2013-02.
In order to facilitate compliance, the DOL has provided model notices that can be used by employers as a starting point for their notices. Please go to www.dol.gov/ebsa/healthreform to access these models.
Penalties for Failing to Comply with the Marketplace Notification Requirement
Although there is confusion regarding whether or not fines are associated with the failure to comply with the Marketplace Notification Requirement, the U.S. Small Business Association, one of the agencies the DOL is using as a conduit for distributing ACA information to business owners, has confirmed that, as of now, no fines will be levied against employers who fail to comply. Notwithstanding those assurances, there is a possibility that fines will be assessed in the future, with the amount of such fines anticipated at $100 per day for each day of non-compliance.
The ACA, and how it affects employers, will continue to evolve as more provisions take effect. We will send out additional Legal Alerts as this area of law develops. Should you have any questions about the Marketplace Notification Requirement, please do not hesitate to contact any member of Smith Haughey Rice & Roegge’s Labor and Employment practice group.