On May 8, the U.S. Department of Labor issued the mandatory employer notices regarding the Health Insurance Exchanges (Marketplaces). The mandate is to release a notice to your employees, NOT a mandate to participate in the exchange.
This legislative update will provide the notices, explain what they are, and when you must provide them to your employees.
The NEW California Exchange for INDIVIDUALS and for COMPANY GROUP PLANS (called the "SHOP" exchange), will be effective 1-1-2014. For purposes of this notification requirement, Employers will need to decide by October 1, 2013 which of the three options below they will choose relative to their benefit plans. (option 1 is continuing with your current plan, no changes and would simply require sending out the notices).
Here's how the options break down:
1. "Play" #1: Continue to offer the same current private market medical plan (non-exchange). Most employers will likely choose this option.
2. "Play" #2: Consider the new GROUP CA "SHOP" exchange products as an alternative. (This option is only available to companies with less than 100 full time employees). Rates are not yet available for this option.
3. Do NOT offer a group plan at all. Employers under fifty full time equivalent employees can choose this option and not have to worry about paying a penalty. On the contrary, employers with OVER fifty full time equivalent employees would be subject to paying a penalty. Penalties start at $2,000 per employee per year. Employees decide on their own whether or not to enroll in the INDIVIDUAL exchange.
Regardless of which route you choose, ALL employers will have to send one of the 2 page notices below to every single employee prior to October 1, 2013.
Below are links to two forms: one for employers currently offering group coverage and one for those which do NOT.
The notice text must be used and there are penalties for not distributing them by October 1, 2013, the date open enrollment in the exchanges is set to begin.
A) Model Notice for employers who DO CURRENTLY offer a health plan to some or all employees
B) Model Notice for employers who do NOT offer a health plan
The DOL Technical also offers information on the Model COBRA Election Notice.
(See COBRA Model Election Notice for a sample) |
Notice Requirements (Time Line & Parameters):
Beginning October 1, 2013, at the time of hiring, employers are required to notify each new employee of their coverage options. For current employees, employers must provide the notice by October 1, 2013.
Beginning October 1, 2013, at the time of hiring, employers are required to notify each new employee of their coverage options. For current employees, employers must provide the notice by October 1, 2013.
DBS recommends waiting to send this mandatory notice out later this summer when the exchange pricing will be finalized. Sending it prior to then could cause confusion for your employees, since pricing is not yet available.
Starting in 2014, employers will have 14 days from an employee's start date (Date of Hire) to provide insurance coverage options via this notification. The notice must be written in language that can be understood by the average employee, and may be provided via first-class mail OR sent electronically. We recommend e-mailing it out, posting it on your intranet (shared drive) and/or a payroll stuffer...if we do not receive your request for assistance, we will assume your company has done this. We recommend keeping proof, in the event of an audit by the IRS or DOL, to prevent penalties.
IMPORTANT POINTS TO CONSIDER & TIMELINE:
IMPORTANT POINTS TO CONSIDER & TIMELINE:
1. DBS is an official "Health Care Reform Specialist Brokerage firm". As a result, DBS is licensed to provide broker services for health care plans inside and outside of the exchange.
DBS will use our extensive understanding of the law to help guide you and your employees to the best option available once rates are made available.
2. Rates for the Individual Exchange have NOT yet been officially released for all age rate categories. Final rates for all age categories should be ready by June or July, and will be based on the employees income. If their household income is less than 400% of the Federal Poverty Level (< $45k as a single, < $93K as a family of four approximately), they will potentially be able to receive TAX Subsidies to help off-set the net cost of premiums. These subsidies, however, are only available if their employer does NOT offer "adequate" nor "affordable" health insurance.
2. Rates for the Individual Exchange have NOT yet been officially released for all age rate categories. Final rates for all age categories should be ready by June or July, and will be based on the employees income. If their household income is less than 400% of the Federal Poverty Level (< $45k as a single, < $93K as a family of four approximately), they will potentially be able to receive TAX Subsidies to help off-set the net cost of premiums. These subsidies, however, are only available if their employer does NOT offer "adequate" nor "affordable" health insurance.
If, as the employer, you are currently offering group medical coverage that is both "affordable" and "adequate" your employees will NOT be eligible for these subsidies. As a result, know that your employees will likely NOT benefit by going to the exchanges because they will potentially not receive the subsidies. Unfortunately,without the subsidies, the cost of the exchange plans will likely NOT be lower than the private market.
3. The Exchanges are primarily intended for lower income individuals without coverage currently.
4. The Web site for the exchange is www.coveredca.com
5. Rates for the GROUP "SHOP" Exchange are also NOT yet available. We expect them to be made available by June or July. When they come out, we will automatically do the analysis for you to see if this nets a better deal than the current private plans you have.
If you have any questions, please contact your Discovery Benefit Solutions Account Manager at (888) 490-7530.
3. The Exchanges are primarily intended for lower income individuals without coverage currently.
4. The Web site for the exchange is www.coveredca.com
5. Rates for the GROUP "SHOP" Exchange are also NOT yet available. We expect them to be made available by June or July. When they come out, we will automatically do the analysis for you to see if this nets a better deal than the current private plans you have.
If you have any questions, please contact your Discovery Benefit Solutions Account Manager at (888) 490-7530.
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