But Don’t Tear Your Hair Out if You’re Late
Here’s the executive summary: Under Health Care Reform, employers must give a notice to all workers that explains how the health insurance exchanges work and the impact of buying coverage off the exchange if the worker already has employer-provider coverage, among other things. But this week, the DOL said that while the notices must be provided, there is no penalty for not handing them out. We recommend you still distribute the notices.
Here’s a slightly more elaborate explanation:
The “individual mandate” under federal Health Care Reform will become effective on January 1, 2014. As of that date, all individuals must have health insurance coverage or pay a penalty.
To ease the purchase of coverage by individuals, state insurance exchanges will offer coverage commencing on January 1, 2014, with open enrollment beginning on October 1, 2013. California’s insurance exchange is called “Covered California.”
Notices due by October 1, 2013
Under the Health Care Reform law, employers must notify employees of their options for coverage under the law by October 1, 2013. The notice informs employees of the existence of the exchanges, the possibility that workers may be eligible for a tax credit if they buy coverage through an exchange, and that workers who purchase coverage through an exchange may lose their employer’s contribution toward coverage.
The deadline for the notice to existing employees is October 1, 2013. And employers are to give it to employees hired after that date within 14 days of their date of hire. The notice must be provided to each employee, regardless of plan-enrollment status or part-time or full-time status. Employers are not required to provide a separate notice to dependents or retirees, but an employer’s obligation to provide notice may extend to its independent contractors and leased workers, depending on the nature of their relationship with the employer.
The notice may be distributed by email or in hard copy, and the Department of Labor created a model notice that employers can use to satisfy their obligations under the law. The model notice, OMB No. 1210-0149, is available on the Department of Labor’s website Click here (if you offer coverage) and here (if you don’t).
There is no penalty (yet) if employers fail to distribute the notice!
The Health Care Reform law has a $100-a-day penalty for noncompliance with its provisions and we had assumed this penalty would apply to employers that fail to distribute the exchange notice. But in a “FAQ on Notice of Coverage Options” posted on the DOL’s website this week, the DOL writes:
Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace?
A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by Oct. 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.
The U.S. Small Business Administration repeated this point in a Sept. 12 online posting that stated: “If your company is covered by the Fair Labor Standards Act, you must provide a written notice to your employees about the Health Insurance Marketplace by Oct.1, 2013. However, there is no fine or penalty under the law for failing to provide the notice.”
You should still distribute the notice
While there is no penalty, you should still distribute the notice to your workers. (Okay, maybe you don’t need to work all weekend to get it out by October 1, but you should make an effort to get it out by then — or shortly thereafter.) In addition to it being “the rule”, the DOL’s position on the penalty could change – and maybe you are focusing on something else during that time and miss it. The DOL has directed employers to provide the information – Just Do It!
The employment lawyers at McPharlin Sprinkles & Thomas LLP are ready to help you with questions about compliance with health care reform. Give us a call!