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The Patient Protection and Affordable Care Act (PPACA) launched various new regulations for employers regarding employee health insurance coverage. While the employer mandate to provide health coverage was postponed by one year, notice requirements still loom. The Fair Labor Standards Act (FLSA) requires employers to provide notice to employees of coverage options through the Health Insurance Marketplace that become available January 1, 2014.

Which Employers must provide notice?

Employers who meet any of these criteria are required to act:

  • Federal, state, or local government agencies;
  • Hospitals; institutions primarily engaged in the care of the sick, the aged, or the mentally ill or developmentally disabled who live on the premises (public or private, for profit or not-for-profit);
  • Pre-schools, elementary or secondary schools or institutions of higher learning (e.g., college), or schools for mentally or physically handicapped or gifted children (public or private, for profit or not-for-profit);
  • Companies/organizations with annual dollar volume of sales or receipts in the amount of $500,000 or more; and
  • Employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce.

What notice is required?

Employers must:

  • Present the existence of a new Marketplace as well as contact information and description of the services it provides;
    Inform employees that they may be eligible for a premium tax credit if they purchase a qualified health plan (QHP) through the Marketplace; and
  • Inform employees that if they purchase a QHP through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

When must Employers act?

Current employees must be provided notice no later than October 1, 2013. It must be in writing or, in limited cases, sent electronically and easily understood by the average employee. Employees hired on or after October 1, 2013, must be provided notice at the time of hiring, but in January 2014, employers will have 14 days leeway in providing the notice.

Employers may wish to refer to model notice language that has been promulgated by the Department of Labor. Failure to act can subject employers to penalties and sanctions by the Department of Labor.