Under the Affordable Healthcare Act, ALL employers who are subject to the Fair Labor Standards Act must send an Exchange Notice to ALL employees on or before October 1, 2013 informing them of their options under the new Health Insurance Marketplaces (Exchanges) that will open January 1, 2014.
The Notice requirement applies to employers of all sizes – whether or not they offer health coverage. Employers must send the Notice to all full-time and part-time employees – whether or not they are benefit-eligible. The Notice must be provided automatically and free of charge. It can be provided by first-class mail or it may be provided electronically, if the requirements of the Department of Labor’s electronic disclosure safe harbor are met (these are at 29 CFR 2520.104b-1(c)). It can probably also be hand-delivered. The guidance does not prohibit or otherwise address hand-delivery, so you will probably want to get each employee to sign or initial that they received the Notice if you do hand-deliver it.
The GOOD NEWS is that the Department of Labor issued Model Notices (called the Notice of Coverage Options). There is a Model Notice for employers who DO offer a health plan to some or all employees (here's the link), and a separate Model Notice for employers who DO NOT offer a health plan to ANY employees (here's the link).
For employees who are hired after October 1, 2013, employers must provide the Exchange Notice at time of hire. For 2014, an employer will be deemed to be in compliance if the Notice is provided within 14 days of an employee’s start date. Also, the Notice requirement at this time is a one-time Notice requirement; not an annual Notice requirement.
Currently, there is no penalty for noncompliance assessed by the Department of Labor, however the Affordable Healthcare Act has a $100 per day penalty. If an employer is acting “in good faith” trying to comply with the law they may not be fined. There is still much confusion about the penalty. We are hoping it will be waived.
For additional information see Technical Release No 2013-02.
Kristine P. Braxton, CPA
Partner - Tax Department