On or before October 1, 2013, all employers (regardless of size) must provide a notice to each employee explaining the Health Insurance Exchanges mandated by Health Care Reform (sometimes referred to as health insurance marketplaces).
The Department of Labor (DOL) has provided a model notice, but the notice is long and includes several confusing provisions. In our experience, employees rarely read lengthy, complex notices. As employers prepare these notices, we wanted to share our insight about how some employers may want to make the notice a more effective communication by supplementing the DOL’s model notice with a cover letter that simply and quickly educates employees about the Exchange and employer-provided coverage.
As employers draft the notice, they should keep the following in mind.
- The notice must explain the benefits of obtaining coverage through the Exchange (including possible tax credits and other subsidies) and the limitations of obtaining coverage through the Exchange (for example, insurance purchased through the Exchange in not paid for with pre-tax dollars). Although the DOL has provided a model notice, there is no legally mandated format for the notice.
- Individuals obtaining insurance through the Exchange will be required to answer several questions regarding employer-provided coverage to determine whether they are eligible for premium assistance tax credits and cost sharing subsidies. The model notice must be customized with details about your health plan so that employees can answer these questions, but, as a practical matter, it may be very difficult for employees to identify the information they need in the confusing model notice.
- Beginning in 2015, large employers (with 50 or more full-time equivalent employees) may be subject to significant penalties if their employees receive premium assistance tax credits through the Exchange. Employees that obtain premium assistance tax credits by reporting inaccurate information regarding their employer’s health plan could cause the employer significant administrative headaches. As a result, it is essential that large employers help their employees understand the employer’s health plan and how it affects the employee’s ability to obtain premium tax credits on the Exchange.
- A clearly worded cover letter may be provided with the model notice to prevent confusion and misunderstanding. If applicable, the cover letter should explain that your employees will not be eligible for the tax credits or subsidies because you offer coverage that meets the IRS minimum value and affordability requirements. The cover letter may also provide simple instructions for answering the Exchange questions regarding employer-provided coverage.
For help preparing this notice or for more information about employee benefits, please contact a member of our health care group at 208.344.6000.