Businesses’ Responsibility to Inform Employees on their Health Coverage Options
One of the final pieces of information that employers will need to comply with the Affordable Care Act has fallen into place. On May 8th, the federal government released details on the responsibilities for almost all employers to notify their employees of their health coverage options under federal healthcare reform.
Current employees must receive these notices by October 1st; new employees within 14 days of hire. Employees are informed through these notices that:
There is a new marketplace that will be offering health coverage options and how to contact it,
- There is a new marketplace that will be offering health coverage options and how to contact it,
- If employer coverage is not of minimum value (60% of average costs) or is unaffordable (more than 9.5% of household income), employees may be eligible for premium tax credits, and
- If employee accesses coverage through the marketplace, they will lose the contribution from their employer, as well as the corresponding tax benefits.
To make compliance as simple as possible, the federal government has issued model notices for employers with and without health plans for their employees. The Technical Release also includes a revised model COBRA election notice, which now includes information about coverage through the Marketplace.
The model notices also include the short form that employees will be required to fill out if their employer offers health benefits but they believe that there are still entitled to a premium tax credit. This applies to all employers subject to the Fair Labor Standards Act (which includes any business with more than $500,000 in sales). See the links below for these model notices.
In California, it is possible that the Exchange, Covered California, will be issuing their own model notices, but until that time, we advise employers to use the notices issued by the Federal government.