ACA: Notice of Exchange Letters are Mandatory!

ACA: Notice of Exchange Letters are Mandatory!

ACA Deadlines Approach

As most Americans know by now, health care reform – the Patient Protection and Affordable Care Act (PPACA)– will make it mandatory beginning in January 2014 for individuals to carry health insurance. As part of the Affordable Care Act (ACA), states must also choose to opt into a health insurance exchange by October 1, 2013. The idea of the exchanges is that they make the insurance companies compete for your business. Insured individuals (as well as their dependents) will have a marketplace at which to shop and choose the best plan for their particular needs. According to you will have a choice of 4 tiers:

      • Bronze: Your plan pays 60%. You pay 40%.
      • Silver: Your plan pays 70%. You pay 30%.
      • Gold: Your plan pays 80%. You pay 20%
      • Platinum: Your plan pays 90%. You pay 10%.

And as stated on the site…

When open enrollment starts on October 1, 2013, you’ll be able to apply, compare plans, and enroll in the Marketplace. Coverage starts as soon as January 1, 2014. Don’t wait,  create your Marketplace account today!

Also, for small businesses, there is a sister program called the Small Business Health Options Program or SHOP Exchange. This program was created to assist small businesses that want to offer insurance to their employees.

Notice of Exchange Letters

Also as part of the ACA mandates, employers are required to send their employees a notice about the exchanges by the October 1, 2013 deadline or be subject to penalties. This deadline also applies to any new employees hired before the deadline. Employers that employ one or more employees who are engaged in interstate commerce or production of goods or services and have at least $500,000 in business annually must send the notice or pay fines. The notice mandate also applies to hospitals, government agencies, and academic institutions.

Incidentally, some employers assume that only the employees who are eligible for insurance need to be sent the exchange notices. This is incorrect. The government requires that each employee must receive a notice, regardless of the employee’s health plan enrollment status and part or full-time employment status. Notice may be provided in writing or electronically under the Department of Labor’s electronic disclosure rules.

Here are the points that must be included in the notice of exchange letter:

    1. The employee must be notified of: The existence of the exchange, services rendered by the exchanges, and accurate and complete contact information for the exchange.
    2. The employee must be notified that: He or she may be eligible for a premium tax credit under the IRS tax codes if (a) the employer pays less than 60 percent of the cost of health insurance offered by the employee; and (b) the employee purchases health insurance through the exchange.
    3. The employee must be notified that if: An employee who purchases health coverage through an exchange may lose the employer’s (tax-free) contribution to the cost of health insurance offered by the employer. 

The Department of Labor and Other Resources…

The Department of Labor website has posted sample versions of the notice to help those employers who must satisfy the mandate. The website provides a samples for those employers who offer a health plan to some or all of their employees, and one for employers who do not offer a health plan. Employers may make any modifications to the notice as long as the content requirements mentioned above are included in the letter.

If you have questions about this requirement or want help to comply with the requirement, please contact Joel Lewinson at 818-593-6777.