Planning Ahead for 2013 Notice of Exchange

This week, the Department of Health and Human Services issued detailed regulations on the establishment of exchanges, the rights of states and notices required from the exchanges.  The regulations, which will be officially published on March 27, 2012, did not cover the notice required by employers.  Employers must, in addition to the other notice requirements under health care reform, provide employees with notice about the exchanges.   By March 1, 2013, all employers, not just large employers, must notify all current employees of the exchanges.  The notice must explain:

  1. The employee’s right to purchase health insurance coverage through a state insurance exchange, the services provided by the exchange and how to contact the exchange;
  2. The employee’s possible eligibility for government subsidies; and
  3. The employee’s possible loss of an employer subsidy, if any, (in the form of a tax-free contribution to the employer-provided health coverage) if health insurance coverage is purchased through the exchange.

The notice must be given to new hires after March 1, 2013.  There are unanswered questions about the content and flexibility of the notice.  For example, can an employer modify the notice if employer-provided coverage is a condition of employment and cannot be waived even if the employee obtains coverage from the exchange?

The notice is not required by ERISA or the tax code, but rather by the Fair Labor Standards Act.  The Department of Labor is expected to issue regulations regarding the notice, but nothing is on its regulatory agenda yet.  There is no specific penalty in health care reform or the Fair Labor Standards Act for failure to provide such notice.

This post was contributed by Megan Hladilek.

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