All local governments, regardless of size, must provide written notice by Oct.1, 2013, to all employees of their option to obtain healthcare coverage through the public exchange (or “Marketplace”), which will be available on Jan. 1, 2014.
The deadline is part of the Affordable Care Act, and while the mandate for large employers (50 or more full-time equivalent employees) to provide “affordable” healthcare coverage has been pushed back to 2015, the individual mandate to have adequate insurance still goes into effect in 2014. As such, employers are required to provide notice of the public exchange option to employees.
The Department of Labor (DOL) has a template notice form available for employers who provide sponsored health coverage, although units of local government may decide to expand on the notice. For example, the individual mandate is not explained in the template notice form, so an employee may not understand that the failure to obtain health insurance would result in the employee paying a penalty. Another form is available for employers who do not provide a sponsored health plan.
The notice to employees must include the following information:
- The public healthcare option is available as of 2014.
- Contact information and a description of the public option. Note that the template form only provides contact information through www.healthcare.gov, so this can seemingly be communicated without providing specific details of Illinois’ healthcare exchange options. In fact, the website instructs individuals that they can compare options only as of Oct.1, so there is a limited amount of information about the public options available at this time.
- The employee may be eligible for a premium tax credit by using the Marketplace.
- The employee may lose any employer contribution to an employer sponsored health plan by electing the public option, and that some/all of the employer contribution may be excludable from federal income.
The notice may be provided by first class mail, or it may be provided electronically if it comports with the DOL’s safe harbor provisions, including a statement that the employee’s email address was voluntarily provided for purposes of receiving such communications (see all provisions).
Another wrinkle in the notice requirement is that employers may want to indicate whether their health plans meet the minimum value standard (MVS) set out in the Internal Revenue Code. This is an intricate determination for which the IRS has issued a special notice to improve understanding of the calculation. From a big-picture perspective, a plan will meet the MVS if it covers at least 60 percent of the total allowed health benefit costs. While the MVS information is not technically required as part of the notice to employees, failing to provide this information may result in the local government having to field several inquiries for each employee who applies for coverage through the Marketplace. Part B of the template notice form includes the MVS information for guidance.
Please contact our office for additional information.
Author: Kelly A. Cahill