DAC Compliance Alert - DOL Releases Model Notice of Exchanges & New Model COBRA Notice

May 24, 2013 – Diversified Administration Corporation – Compliance Alert Department of Labor Releases Exchange Notice & New Model COBRA Notice

Department of Labor Releases Exchange Notice
By David Follansbee

The Affordable Care Act requires that employers must provide each employee a written notice at the time of hiring that explains their rights to enroll in the Exchanges/Marketplace. In response to employer requests for timely distribution of the form, the Department of Labor Employee Benefits Security Administration (EBSA) issued Technical Release 2013-02 on May 8, 2012 covering the model Exchange notice and an updated model COBRA election notice for group health plans.

The DOL has provided two different versions of the model notice, one to be used be employers who offer health coverage and one to be used by employers who do not offer health coverage to their employees. The model exchange notices are available on the US DOL website: www.dol.gov/ebsa.

What Employers are Subject to the Notice Requirements?
Employers subject to FLSA (Fair Labor Standards Act) are required to provide the notice. In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most businesses, a test of not less than $500,000 in annual dollar volume of business applies.The FLSA also specifically covers the following entities: hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies.

Providing the Notice:
Employers must provide a notice of coverage options 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 other individuals who are or may become eligible for coverage under the plan as non-employees.

Timing and Delivery of the Notice:
The written notice must be provided by employers to new employees hired on or after October 1, 2013. The notice to new employees will be considered timely if provided within 14 days from date of hire.

For employees who are current employees prior to October 1, 2013, written notice must be provided no later than October 1, 2013.

The notice must be automatic and provided free of charge. The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. It may also be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met. (Please contact Carol Parda-Ziolko by email at cparda-ziolko@diversifiedgb.com for guidelines for distributing the notice electronically). Read More….
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