The Affordable Care Act (ACA) requires employers subject to the Fair Labor Standards Act to give notice to employees regarding their abilities to enroll in coverage on an Exchange, such as Covered California or Nevada Health Link. The notices, referred to as Exchange or Marketplace Model Notices, must be given to new employees on their dates of hire. These notices must be given to part-time and full-time employees, regardless of plan enrollment status – if applicable.
These Model Notices explain the availability of coverage through a public Exchange, the availability of Premium Tax Credits (PTCs) – which subsidize the cost of coverage on an Exchange, and discuss how an offer of employer-sponsored health coverage may impact an employee’s experience on an Exchange. An employee offered “affordable” coverage by an employer, regardless of the employer’s size or status as an Applicable Large Employer (ALE), is not eligible for a PTC on the Exchange. If an employee receives an offer of affordable coverage and incorrectly claims and receives a PTC, the employee will be required to repay some or all of cost of the PTC during tax-filing season. The cost of these PTC repayments can carry a heavy financial burden.
For the 2017 tax year, the employee-only premium of the lowest cost plan offered by an employer cannot exceed 9.69% of an employee’s rate of pay, W2 Box-1 income, or Federal Poverty Level in order for the coverage to be considered affordable by the ACA’s standards. The coverage must also provide Minimum Essential Coverage (MEC) and must meet minimum value (MV), which nearly all group health plans provide and meet.
The Model Notices are provided in multiple formats by the Department of Labor (DOL) Labor, and there are two versions of the documents. One version is for employers who offer a health plan to some or all employees. The other version is for employers who do not offer a health plan. The documents can be amended by the employer and are available in English and Spanish, in printer-friendly PDF format, and in Word-document format that can be manipulated.
These notices have generally remained unchanged since the inception of the ACA; however, expiration dates are listed at the top of the forms. The expiration date of these forms, as of this article’s publishing date, is March 31, 2017. Until the DOL releases amended model notices, employers are allowed to continue using the notices past their expiration date. With the change in presidential administration, we could see a delay in release of updated notices.
While there are no noncompliance penalties/fines for not giving these notices to employees, employers are encouraged to follow this ACA requirement. Noncompliance could lead to DOL audits or employee lawsuits. Employers are free to condense or modify notices and are able to add their own employer information to these notices, so compliance with this ACA mandate should be relatively painless for employers.
Word & Brown will announce when new model notice templates are released by the DOL. In the meantime, employers can use their own notices or the soon-to-be-expired DOL notices until revised notices are released by the DOL.