ALEXANDRIA, VA – Despite all of the talk in Washington about defunding or repealing the healthcare reform law commonly called “Obamacare,” employers should understand that, for better or worse, the law is not going anywhere. October 1, 2013 represents one of the more significant benchmarks under Obamacare.

Not only are the insurance marketplaces (or “exchanges”) beginning their open enrollment period on that day, but the law also requires employers to provide a notice to their employees of the availability of coverage options on these exchanges. 

This is not something for employers to fret over, however, for several reasons. First, providing the notice is easy. Second, the Department of Labor has provided employers with flexibility to craft their notices in a manner that is consistent with the information that is available to them. Finally — and perhaps most importantly — the Department of Labor recently announced that there would be no monetary penalties for employers that fail to provide the notice at all. 

Nonetheless, as discussed below, there are several reasons why employers may want to provide the notice to their employees.

By way of background, Obamacare requires employers to provide all employees — both full- and part-time — with a copy of the notice no later than March of this year. The Department of Labor, which administers the notice obligation, said in February, however, that this deadline was delayed, in part to give itself more time to finalize a model notice that employers could use to satisfy what should be a simple, straightforward administrative obligation: distribution of a form notice. This model notice was released on May 8, along with the new deadline of October 1. The Department further said that new employees hired after October 1st are entitled to receive a copy of the notice “at the time of hire” (which, for the balance of 2013 and for 2014, will be considered accomplished if the notice is delivered within 14 days of the date of hire). This is a one-time notice obligation; there is no requirement to provide a copy of the notice on an annual basis or otherwise after the initial notice is provided.

The actual statutory requirements say the notice must inform employees of three things:

1.    The existence of the health insurance exchanges, the services they offer, and how employees can contact an exchange for further information;

2.    That if the employer’s share of total allowed costs of benefits provided by the benefits plan is less than 60% of total costs (that is, it does not meet the law’s “minimum value” requirements), the employee may be eligible for a premium tax credit through an exchange; and

3.    That if the employee obtains coverage through the marketplace, the employee will lose the employer’s contribution and corresponding tax benefits.

The Department of Labor released a model notice for employers that offer health plans to their employees. Part A of the model notice is well designed; it covers all of the statutory requirements outlined above and also explains the key concepts in an accessible way. This includes basic descriptions of the exchanges and the general obligations under the statute.  Even though there is no penalty for failure to issue this notice, there is little reason for employers not to at least provide employees with the information contained in Part A. (This could be as easy as deleting the remainder of the model notice and only providing Part A.)

Part B of the model notice is entirely optional, since all of the statutorily required information is contained in part A. Employers should feel free to fill out any or all of the information contained in part B. This may involve filling out those aspects of the model notice that are easily available and simple to provide, while deleting other portions of the model notice. As discussed below, there may be administrative benefits to providing this information, so that is an additional consideration.

As a general matter, part B it is well intended — it is designed to give employees as much information as is available about the employer’s plan so the employee can make a judgment regarding his or her eligibility for exchange subsidies. The employer may not know many of these “affordability” details, on October 1, however. Although the model notice appears to indicate that some of this information is not optional, employers do not need to provide this information in the notice in order to meet their statutory obligations. Indeed, an employer should delete Part B completely unless it is in a position to know that at least one of its plans will be “affordable” for all of its employees who are eligible to participate.  In fact, with respect to all of Part B of the model notice, an employer can delete or rewrite as it wishes to make the notice as non-problematic as possible.

Most employers that are able to provide the information in Part B should do so simply because there is much upside and no downside. Specifically, if it is not provided here, the employer will inevitably have to respond on an individual basis for each employee that applies for coverage through an exchange. But all NACS members can make their own determination regarding whether it wants to do that. None of the Part B information is required.

So in the coming weeks, you are likely to hear a lot of discussion regarding the “exchange notice” deadline on October 1. NACS members should rest easy, however. Providing this notice is simple and straightforward. (And if you fail to do so, there is no penalty!)

(NOTE: The Department of Labor also released a model notice for employers that do not offer health plans to employees. That notice can be found here. As with the other model notice discussed above, only Part A of this second model notice is required under the law — and there are no penalties for not providing it at all.)