Health Insurance Marketplace Notice: FAQ

The Patient Protection and Affordable Care Act (PPACA), the federal healthcare reform law, amended the Fair Labor Standards Act (FLSA) to require employers subject to the FLSA to issue a notice to all employees by October 1, 2013, regarding the existence of the PPACA-mandated public health insurance exchanges (now referred to as “marketplaces”). Generally speaking, the FLSA applies to governmental agencies, hospitals and other inpatient healthcare institutions, schools, and businesses with receipts of at least $500,000 annually.

Recently, the Department of Labor issued model notices employers may use to satisfy this notice obligation. This publication is designed to answer common questions relating to an employer’s obligation to complete and distribute the Marketplace Notice.

To whom must the Marketplace Notice be distributed?
Employers must provide a Marketplace Notice to each employee, regardless of plan eligibility or enrollment status, part-time/full-time status, or status as a regular, temporary or seasonal employee. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees (independent contractors, retirees, partners, etc.).

When must employers distribute the Marketplace Notice?
Employers are required to provide the Marketplace Notice to each employee by October 1, 2013. For employees hired after that date, the employer must provide the Notice within 14 days of the employee’s start date. The Notice obligation does not appear to be a continuing obligation; that is, once supplied to an employee by the employer, it appears the employer is not required to give it again, for example, at open enrollment. After October 1, 2013, we expect employers will include the notice in new hire packets.

How are employers required to distribute the Marketplace Notice?
Employers must supply the Marketplace Notice in writing. They may provide the notice by first-class mail. Alternatively, they may provide it electronically if they satisfy the requirements of the Department of Labor’s electronic distribution rules (your Lockton account service team can supply you with information about these rules). Employers may combine the notice with other health plan materials, but this may be impractical unless all employees are eligible for the plan.

There are multiple model Marketplace Notices…which Notice does an employer use?
There is one model for employers who do not offer a health plan. This model notice should be used if the employer does not offer a health plan to any of its employees. This includes instances where the only health plan available to its employees is offered by a union, even though the employer makes contributions on behalf of the employees.
There is another model for employers who offer a health plan to some or all employees. This means that even if you offer benefits to only a certain class of employees, you would still use this model notice. This is also the case if the coverage you provide may not be “affordable” (as the PPACA defines “affordable”) for all participants.
The model Marketplace Notices are available here, in English and in Spanish. The English versions maybe downloaded in MS Word, for easier editing.

What name, EIN, telephone number and address does an employer use if it is part of a controlled group of businesses?
Sections 3 through 9 of the model notice require information about the employer. Completion and distribution of the notice is an employer obligation, not an ERISA plan obligation. Thus, each employer (subject to the FLSA) within a controlled group of companies is required to distribute the notice to its own employees under its own name, EIN, telephone number and address. The contact information contained in sections 10 through 12 of the model notice may be different and may relate to the person(s) at the plan sponsor who can best answer questions about employee health coverage.

Should an employer complete optional sections 13 through 16 on page 3 of the model Marketplace Notice?
Sections 13 through 16 of the model Marketplace Notice provide additional information to employees to assist them if and when they purchase health insurance coverage through a Marketplace. Completing these sections is optional. To streamline the distribution process and minimize the burden of completing these notices, employers might reasonably decide not to provide the information in these optional sections. Employers choosing to not complete questions 13 forward should remove the last sentence on the prior page, which states: “Here’s the employer information you’ll enter when you visit HealthCare.gov to find out if you can get a tax credit to lower your monthly premiums.”

What are the penalties for not distributing the Marketplace Notice?
As of the date of this publication, there are no penalties described by the government for failure to provide the Marketplace Notice to employees. It is possible that, if an employer fails to supply the notice and, as a result, an employee fails to take advantage of Marketplace-based coverage, the employee might seek redress from the employer. In any event, we certainly recommend employers satisfy this notice obligation.

via Jeff Lowry, ERISA Attorney
Lockton Dunning Benefits

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About thebenefitblog

Eric is a Vice President at Lockton Insurance Brokers, Inc. He joined Lockton in 2005 specializing in Health and Welfare Benefits, Qualified & Non-Qualified Retirement Plans and Life Insurance for Business Planning. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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