A health insurance exchange is basically a virtual health insurance marketplace that is intended to create a more organized and competitive market for buying health insurance. Under the Patient Protection and Affordable Care Act (PPACA), states are encouraged, but not required to set up a state-based exchange. However, if they fail to do so, the federal government will step in to help facilitate an exchange in the state.
With some states still weighing their options with respect to setting up certain types of health insurance exchanges, employers were beginning to worry about an important compliance deadline on the horizon. According to the original Health Care Reform Acts, effective March 1, 2013, employers of all sizes were required to provide each newly hired employee with a written notice of the existence of health insurance exchanges and potential subsidies available (Notice of Exchanges and Subsidies). This notice was subsequently required to be provided to all current employees.
However, on January 24, 2013, the US Department of Labor (DOL) announced that it has delayed the compliance date for the delivery of this document. The delay most likely results from some uncertainty and indecision among state exchanges and anticipated information regarding the federal exchange program. The DOL estimates that the notices (for both new hires and current employees) will be required in either late summer or early fall of this year. The DOL will publish a model notice prior to the new deadline.
The notice must contain the following information:
- Announcement of the exchange and an explanation of services provided through the exchange.
- Statement of an employee’s right to purchase insurance through the exchange, as well as information on how employees can contact the exchange.
- Notification of whether or not the employer’s health plan offers “minimum essential coverage” as defined by the federal law and the potential that an employee has to receive a government subsidy.
- Notice that employees may lose the employer’s contribution to health coverage if they purchase insurance through the exchange.
If your company has more than fifty full-time equivalent employees (FTEs), it is time to carefully consider how your organization intends to comply with the Employer Mandate, or if it determines that non-compliance is the best strategic option. Whether your organization will face employer penalties depends on whether your current health plan design and employer contribution meet the minimum requirements. Your decision in this regard may affect information contained in this notice.
At the time of issuance of the notices, we recommend that your organization have a resource available to answer employee questions arising out of the notices. Should you have questions regarding the Employer Mandate or this notice requirement, please reach out to your Health Plan Broker.