Compliance

The Affordable Care Act (ACA) presents many new compliance challenges that range from ensuring plan designs incorporate the required benefits to notifying employee’s about the public Exchange.

Notice of Coverage Options

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The Affordable Care Act (ACA) amended the Fair Labor Standards Act (FLSA) to require employers who are governed by FLSA to provide new employees a written Notice of Coverage Options within 14 days from their start date.  The notice must inform the employee:

  • Of the existence of the public Exchange, including a description of the services provided and how the employee may contact the Exchange.
  • If the employer’s share of total allowed costs of benefits provided under the plan is less than 60%, the employee may be eligible for a premium tax credit if coverage is purchased through the Exchange.
  • If the employee purchases coverage through the Exchange, he or she may lose any employer contributions and that all or some of the contributions may be excluded from federal income tax.

All employers must provide the notice to all employees, regardless of whether they are enrolled in a plan or whether they are full-time or part-time.  Notices are not required to be provided to dependents or others who are not employees.

The U.S. Department of Labor (DOL) has released a model notice employers may use and it is available at:

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

Note:  The DOL issued guidance clarifying that, although the FLSA indicates employers are obligated to provide the Notice of Coverage Options, there is no fine or penalty for failing to do so.