DOL Issues Final Rule Extending FMLA Leave Rights to Same-Sex Couples: Here’s Everything Employers Need to Know

The Department of Labor has issued a final rule that will allow an employee to takeFMLA leave to care for a same-sex spouse, regardless of whether the employee lives in a state that recognizes their marital status.  This rule change will impact the manner in which employers administer FMLA leave.

Where We Were

The FMLA regulations have guided us since their inception that the term “spouse” was to be defined according to the law of the state in which an employee resides, as opposed to the jurisdiction where the marriage was entered.  This distinction became particularly significant after the U.S. Supreme Court’s decision in United States v. Windsor, which struck down Section 3 of the Defense of Marriage Act (DOMA) as unconstitutional. Before Windsor, that section restricted the definition of marriage for purposes of federal law to opposite-sex marriages. Consequently, federal FMLA leave was generally not available to same-sex married couples even in states that recognized gay marriage. Windsor effectively extended FMLA rights to same-sex married couples, but only if they resided in a state that recognized same-sex marriages, even if they were legally married in another state.

After the Windsor decision, President Obama instructed federal agencies such as the DOL to review all relevant federal statutes to implement the decision and, as expected, the DOL took it as an opportunity to apply Windsor to the FMLA regulations. In June 2014, the DOL adopted a proposed “state of celebration” rule, in which a spousal status for purposes of FMLA is determined not on the state in which the employee currently resides (as currently stated in the FMLA regulations), but based on the law of the state where the employee was married. Thus, if two individuals of the same sex get married in a state that recognizes same-sex marriage, they are considered to be married for federal FMLA purposes even if the state in which they live and work does not currently recognize same-sex marriage. For example, if the employee was married in New York, but now resides with his same-sex spouse in Texas, the employee will enjoy FMLA rights to care for his spouse as if he had resided in New York, since they were married in New York and that state recognizes the right of same-sex couples to marry.

Where We Are Now

After issuing its proposed rule in 2014, the agency now has announced that, on February 25, 2015, it will issue a new final rule (to take effect March 27, 2015) providing that the definition of “spouse” indeed is determined by the state in which a marriage is entered (i.e., the “state of celebration”). As the DOL points out, a place of celebration rule “allows all legally married couples, whether opposite-sex or same-sex, or married under common law, to have consistent federal family leave rights regardless of where they live.”  The DOL notes that, as of February 13, 2015, 32 states and the District of Columbia (as well as 18 countries) extend the right to marry to both same- and opposite-sex partners.

 

A copy of the DOL’s fact sheet on the final rule can be accessed here.

What Does This Mean for Employers?

Here’s what employers need to know and do:

1.  As an initial matter, determine whether the FMLA applies to you.  If so, you should:

• Train your leave administrators and supervisors on the new rule.  If any of these employees are remotely involved in the leave management process (e.g., they pick up the phone when an employee reports an absence, they answer employee questions about absences, they determine eligibility and/or designation rights under FMLA), they need to understand their responsibilities under the new rule, since benefits available to certain employees will have changed.
• Review and amend your FMLA policy and procedures, as well as all FMLA-related forms and notices, to the extent that they specifically define the term “spouse” in a way that does not account for the new rule.
• Be mindful that this new regulation covers individuals who enter into a same-sex marriage. However, the FMLA does not protect civil unions or domestic partnerships, so employers are well advised to determine whether FMLA applies in any particular situation.  That said, employers are free to provide greater rights than those provided for under the FMLA.

2.  Whether or not FMLA applies to you, you should determine whether any state leave law applies to you.  These laws may differ on their definitions of same-sex marriage, civil unions and domestic partnerships, and may offer different leave rights depending on the protected category.

3.  Keep in mind two particular FAQs on This New DOL Rule (taken, in part, from of the DOL Final Rule FAQs):

Q. Can employers require documentation to verify that a same-sex or common law marriage is valid?

A. The Final Rule makes no changes to the manner in which employers may require employees who take leave to care for a family member to provide reasonable documentation for purposes of confirming a family relationship. An employee may satisfy this requirement either by providing documentation such as a marriage license or a court document, or by providing a simple statement asserting that the requisite family relationship exists. 29 C.F.R. § 825.122(k)

Here’s the catch: It is the employee’s choice to provide a simple statement or another type of document. And DOL has us in a trick bag as to when we can and should ask for reasonable documentation.  On one hand, the agency tells us in the final rule, “Employers have the option to request documentation of a family relationship but are not required to do so in all instances.” It also rejected calls for instituting a standard in which employers would be required to show that they requested this documentation in a consistent, non-discriminatory manner.  Yet, on the other hand, the DOL is quick to point out that employers “may not use a request for confirmation of a family relationship in a manner that interferes with an employee’s exercise or attempt to exercise his or her FMLA rights.”

Thus, from a practical standpoint, shouldn’t employers institute a consistently-applied, non-discriminatory policy when asking for confirmation that a family relationship exists?  In a word, yes. Otherwise, employers risk a claim that they are treating certain employees in a discriminatory manner, thereby interfering with their FMLA rights.

One thing is clear:  If an employee has already submitted proof of marriage to the employer for another purpose, such as in electing health care benefits for the employee’s spouse, the DOL finds that “such proof is sufficient to confirm the family relationship for purposes of FMLA leave.”  So, employers, no second bites at the apple if you already have this information!

Q. Does the Final Rule Change the Manner in Which Employees Take FMLA leave to care for a child to whom they stand in loco parentis?

A.  No.  In June 2010, the DOL recognized that eligible employees may take leave to care for the child of the employee’s same-sex partner (married or unmarried) or unmarried opposite-sex partner, provided that the employee meets the in loco parentis requirement of providing day-to-day care or financial support for the child. (You can find more on the in loco parentis rule in DOL Fact Sheet #28B.) In other words, this new rule has no impact on the standards for determining the existence of an in loco parentis relationship.

Prepare for Imminent FLSA White-Collar Regulations

While waiting for the pending issuance of the proposed Fair Labor Standards Act (FLSA) white-collar regulations, employers can begin taking some steps now to prepare.

Many believe the proposed regulations will be issued in March, although the proposed regs haven’t been sent yet to the Office of Management and Budget.

It is rumored that California’s quantitative duties test may be applied to the FLSA executive exemption, which would require employees to spend at least 50 percent of their time in exempt work in order to be classified as exempt. An adviser stated they would be surprised if thequantitative duties test was limited to the executive exemption and feel it might be applied as well to the administrative and professional exemptions.

Employers may begin doing an analysis now on their exempt population and how this change would affect them.

For many companies, some classes of employees are nonexempt in California, but exempt in the rest of the country. That may change with the new rule as well, if California’s quantitative duties test is applied across the nation.

Five Key Steps 

Various legal counsel recommends five key steps employers should take now in anticipation of the revised overtime regulations:

1. Determine whether you have current job descriptions that accurately reflect job duties and convey the core functions and responsibilities of each role, particularly for exempt positions. Ideally, job descriptions for exempt employees should demonstrate to a reader not familiar with the company—e.g., a DOL [Department of Labor] investigator or a plaintiff’s lawyer—exactly why a role is exempt in clear,straightforward language.
   
2. Identify, under advice of counsel to maintain attorney-client privilege, currently exempt positions that may be in the gray zone between clearly exempt and clearly nonexempt. These roles may present the most immediate concern if, as anticipated, the new regulations significantly narrow the exemptions. This may include positions whose salary is toward the lower end of the exempt spectrum, as well as jobs where the employees may engage in a large amount of arguably nonexempt activity.
3. Make sure business leaders have an understanding that these proposed regulations are coming and that they will have a potentially disruptive effect on the business. Also, business leaders should understand the rules may end up in limbo for several months or more in the event of congressional pushback or litigation. The potential for having to reclassify a large number of employees from exempt to nonexempt may require examining compensation to find alternative ways to incentivize the desired job behaviors, addressing potential benefits consequences and anticipating morale and other employee relations effects. Moreover, employers should know to expect a comment period, followed months later by what will presumably be a final rule that may differ in numerous important respects from the version that appears in the notice of proposed rulemaking.
4. Begin developing contingency plans for how the business will respond if the minimum salary threshold increases substantially to $40,000, $50,000 or even $60,000. If the salary threshold for exempt status lurches sharply upward, businesses may face a tough choice regarding whether to award employees an outsized raise in order to maintain exempt status or, instead, to convert roles to nonexempt status.
   
5. Figure out what the company’s approach will be in establishing work schedules and pay rates for employees converted from exempt to nonexempt. Will the approach be to pay people hourly or to use a salary plus overtime? Will the new pay rates attempt to replicate the employee’s pre-conversion earnings and schedule, such that employees who worked, say, 45 or 50 hours a week pre-conversion will continue to work those hours and now receive premium overtime pay? Or will there be a desire to avoid the heavy marginal cost of the overtime hours, leading the business to adjust employee schedules down to 40 hours, to reduce their overall earnings accordingly and to hire additional head count to cover the workload?

Employers should begin now by talking to the managers or supervisors responsible for these exempt employees to determine the actual job duties for the employees as opposed to the stated job duties, because it’s the facts that matter most.

Employers need to know their workforce and be proactive. They should identify those exempt positions whose classification barely meets the FLSA minimum qualifications for a white-collar exemption under either the duties or compensation components. If either the duty or salary component is affected by regulatory changes, employers will know these identified positions will be targeted first.

The more lead time that a business has to grapple with these issues, the more satisfactory the process and the outcome will be for everyone.

Employers Beware of Premium Reimbursement Arrangements

The Department of Labor has just published a series of FAQs regarding premium reimbursement arrangements.  Specifically, the FAQs address the following arrangements:

 

Situation #1: An arrangement in which an employer offers an employee cash to reimburse the purchase of an individual market policy.

 

When an employer provides cash reimbursement to the employee to purchase an individual medical  policy, the DOL takes the position that the employer’s payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, regardless of whether the employer treats the money as pre or post tax to the employee. Therefore, the arrangement is considered a group health plan that is subject to the market reform provisions of the Affordable Care Act applicable to group health plans and because it does not comply (and cannot comply) with such provisions, it may be subject to penalties.

 

Situation #2: An arrangement in which an employer offers employees with high cost claims  a choice between enrollment in its group health plan or cash.

 

The DOL takes the position that offering a choice between enrolling in the group health plan or cash only to employees with a high claims risk would be discriminatory based on one or more health factors. The DOL states that such arrangements will violate such nondiscrimination provisions regardless of whether (1) the cash payment is treated by the employer as pre-tax or post-tax to the employee, (2) the employer is involved in the selection or purchase of any individual medical policy, or (3) the employee obtains any individual health insurance. The DOL also notes that such an arrangement, depending on facts and circumstances, could result in discrimination under an employer’s cafeteria plan.

 

Situation #3: An arrangement where an employer cancels its group policy, sets up a reimbursement plan (like an HRA) that works with health insurance brokers or agents to help employees select individual insurance policies, and allows eligible employees to access the premium tax credits for Marketplace coverage.

 

The DOL takes the position that such an arrangement is a considered a group health plan and, therefore, employees participating in such arrangement are ineligible for premium tax credits (or cost-sharing reductions) for Marketplace coverage. The DOL also takes the position that such arrangements are subject to the market reform provisions of the ACA and cannot be integrated with individual market policies to satisfy the market reforms.  Thus, such arrangements can trigger penalties.

 

Key Takeaway

 

There has been quite a bit of banter regarding whether any of the foregoing arrangements could be an effective way for employers to avoid complying with the market reforms and other provisions of the Affordable Care Act applicable to group health plans.  These FAQs are a strong indication that the DOL will be forceful in its interpretation and enforcement of these provisions.

Insurance Premium Rebates- Can the Company Keep the Money?

In short, it depends.

 

Recently, several clients have received their annual premium rebate checks from their group health insurance company and are looking for guidance on the proper use of these funds. Under the Patient Protection and Affordable Care Act (“PPACA”), it requires health insurance companies now operate on specific medical loss ratios (80% for employers with less than 100 employees and 85% for employers with more than 100 lives). If an insurance company does not meet the stated medical loss ratios (MLRs), it is required to rebate part of the premium received back to groups.

 

Below is a summarized analysis used to determine if an employer can keep the premium rebate in whole or in part:

 

1. Plan Assets: The first step is to determine who owns the rebate. In accordance with the DOL’s guidance (Technical Release 2011-04), the portion of the rebate that is attributable to employee contributions is considered a plan asset. Therefore, if employees contributed to the cost of the group medical insurance plan, they are entitled a percentage of the rebate equal to the cost paid by the employees (i.e.- if employees paid 25% of the premiums, they would be entitled to 25% of the rebate). If the employer paid the entire cost of the premium, then no part of the rebate would be attributable to employee contributions permitting the employer to retain the full rebate.

    

2. Allocating the Rebate: In deciding on an allocation method, companies can weigh the costs to the plan and the ultimate plan benefit as well as the competing interests of participants (or classes of participants) provided such method is reasonable, fair and objective. For example, if the company determines that the cost of distributing the rebate to former participants/employees equals the amount of the rebate, the DOL concludes that a company may allocate the proceeds only to current participants on a reasonable, fair and objective method. More directly, if distributing the payments to any participants is not cost effective (payments are of de minimis amounts or would give rise to tax consequences to participants or the plan), companies may consider utilizing the rebate for other permissible purposes including applying the rebate toward future participant premium payments or toward benefit enhancements. The key take-away is that companies: (1) must actually perform this allocation analysis and (2) should retain a written memorandum of the steps taken to allocate the rebate on a reasonable, fair and objective basis. Remember too that if employees have paid for their contributions on a pre-tax basis under a Section 125 plan, MLR rebates distributed back to employees as cash or a reduction in employee premiums are considered taxable in the year of distribution.

    

3. When Must The Rebate Be Applied? Generally, ERISA plan assets must be held in a trust. However, if the premium rebate is allocated within 3 months of receipt, companies are permitted to rely on an exemption to the trust requirement. At this time, the DOL has not released any additional guidance that would permit a calendar year plan to retain the rebate until January 1 in order to ease the administrative burden of applying the rebate. Therefore, any premium rebates received should generally be allocated no later than early November 2014.

 

For further guidance on premium rebates or any of the PPACA or ACA requirements for employers, please contact our office. 

Obama Administration Announces Proposed Rule Extending FMLA Leave Rights for Same-Sex Couples

The Department of Labor announced on June 20th a proposed rule that would allow an employee to take FMLA leave to care for their same-sex spouse, regardless of whether the employee lives in a state that recognizes their marital status.  As expected, the DOL has adopted a “state of celebration” rule, in which a spousal status for purposes of FMLA is determined not on the state in which the employee currently resides (as currently stated in the FMLA regulations), but based on the law of the state where the employee was married.  For example, if the employee was married in New York, but now resides with his same-sex spouse in Indiana, the employee will enjoy FMLA rights to care for his spouse as if he had resided in New York.

 

DOL’s Interpretation of FMLA after U.S. v. Windsor

 

The FMLA allows employees to take leave from work to care for a family member with a serious health condition.  Before U.S. v. Windsor abolished certain portions of the Defense of Marriage Act (DOMA), same-sex couples were not allowed to take FMLA leave to care for a same-sex spouse, since DOMA did not recognize the relationship. After the Windsor decision but before the recent announcement, employees were eligible to take FMLA leave to care for a same-sex spouse only if they have resided in a state in which same-sex marriage is legal.

According to the DOL’s notification, the proposed new FMLA regulation includes the following highlights:

• The Department is proposing to move from a “state of residence” rule to a rule based on where the marriage was entered into (sometimes referred to as “place of celebration”).
• The proposed definition of spouse expressly references the inclusion of same-sex marriages in addition to common law marriages, and will encompass same-sex marriages entered into abroad that could have been entered into in at least one State.
•  The Department proposes to define spouse as follows:
• Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under State law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either (1) was entered into in a State that recognizes such marriages or, (2) if entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.

 

The proposed rule would mean that eligible employees, regardless of where they live, would be able to:

 

• Take FMLA leave to care for their same-sex spouse with a serious health condition
• Take qualifying exigency leave due to their same sex spouse’s covered military service
• Take military caregiver leave for their same-sex spouse

 

The DOL announced the proposed changes on Friday in a press release, stating, ”The basic promise of the FMLA is that no one should have to choose between succeeding at work and being a loving family caregiver … Under the proposed revisions, the FMLA will be applied to all families equally, enabling individuals in same-sex marriages to fully exercise their rights and fulfill their responsibilities to their families.”

 

The Notice is Not Unexpected

 

It was only a matter of time before this regulatory announcement became reality.  In fact, the DOL foreshadowed the move when it issued Technical Release 2013-04 in September 2013, at which time the agency took the position that — at least with respect to employee benefit plans — the terms “spouse” and “marriage” in Title I of ERISA and its implementing regulations “should be read to include same-sex couples legally married in any state or foreign jurisdiction that recognizes such marriages, regardless of where they currently live.”

 

Next Steps

 

As with other proposed regulatory changes, the public will be given the chance to provide comment directly to the DOL on the proposed change before the agency issues a final rule on the issue. After the final rule is adopted, employers should review and amend their FMLA policy and procedures, as well as all FMLA-related forms and notices.  

DOL Announced Companies Will Not Be Fined If They Don’t Notify Employees About Exchange

As a business owner, it is important to understand how the Affordable Care Act may affect your business. However, with so many misconceptions about about Health Care Reform works, this can be difficult.

 

A common myth is that business owners will be fined if they do not provide notification to their employees about the new Health Insurance Marketplace.

 

If your company is covered by the Fair Labor Standards Act (FLSA), you must provide a written notice to your employees about the Health Insurance Marketplace (aka Exchange) by October 1, 2013, however the Department of Labor has announced is no fine or penalty currently under the law for failing to provide this notice.

 

For more information on the Exchange notice, please contact our office or review a previous post on this topic.

What Small Businesses Need to Do for Obamacare Before Oct 1st

The health insurance Marketplace created by the Affordable Care Act (ACA) will open on October 1st. Most small employers (those with 50 or fewer full-time employees) are not required to offer health insurance coverage under ACA. Businesses with more than 50 full time employees have gotten a one year reprieve from the “pay or play” penalties. But all companies, regardless of size, are required to notify their employees about the Obamacare Marketplaces by October 1st.

 

The state and federal insurance exchanges are websites on which individuals and small businesses can shop for health plans. Though the deadline is less than a month away, many small businesses  may not realize they have to notify employees of the existence of the Marketplace (aka Exchange). Many small business owners are unaware of this requirement or are under the misconception that it does not apply to them because they are too small to be governed by the health care reform law’s mandate. It is not clear how the requirement will be enforced yet, but penalties for businesses that do not comply could reach $100 per worker per day.

 

Some employers assume that because they are a small business who does not offer health insurance currently that the requirement does not apply to them. The Exchange notification requirement applies to any business regulated under the Fair Labor Standards Act (FLSA), which covers all companies with at least one employee and $500,000 in annual revenue.

 

The U.S. Department of Labor has posted information about the notification requirement on its website and has provided model notices (in both English & Spanish) to be used by both employers who offer insurance and those who do not offer insurance.

 

The one to three page model notices can be downloaded, filled out, and printed, either for distribution in the workplace or for mailing to employees’ homes. Employees who are hired after October 1st must be provided  the notice within 14 days of their date of hire with the company. Employees must be provided the notice, regardless of their enrollment status in the group’s medical plan.  The safest route is to distribute the notice via U.S. mail or follow the instructions for distributing it electronically. Currently there is no requirement that states the employer must obtain signatures from employees confirming their receipt of the notice.

 

Please contact our office for more information on how to ensure you business is compliant with ACA requirements in 2014.

SHOP Model Notices Now Available in Spanish

The DOL’s Employee Benefits Security Administration (EBSA) has made available Spanish language versions of model notices to employees of health coverage options. The Affordable Care Act (ACA) requires employers to provide employees with a notice of their health insurance coverage options available through the future health insurance exchanges no later than October 1, 2013. The English version of these model notices were released in May 2013.

 

Please contact our office for copies of the model notice(s) in English and/or Spanish.

How Does the Fall of DOMA Impact FMLA and Other Employee Benefits?

On June 26, 2013, the US Supreme Court declared the Defense of Marriage Act (DOMA) as unconstitutional. DOMA had previously established the federal definition of marriage as a legal union only between one man and one woman. The extinction of DOMA already has HR departments thinking how this will impact the future of the Family and Medical Leave Act (FMLA) as well as other benefits.

 

How FMLA is Impacted

 

As we know, the FMLA allows otherwise eligible employees to take leave to care for a family member with a serious health condition. “Family member” includes the employee’s spouse, which, under the FMLA regulations, is defined as:

 

a husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized. 29 C.F.R. 825.102

 

Initially, this seems to suggest that the DOL would look to state law to define “spouse”…but not so fast. According to a 1998 Department of Labor opinion letter, the DOL acknowledged that the FMLA was bound by DOMA’s definition that “spouse” could only be a person of the opposite sex who is a husband or wife. Thus, the DOL has taken the position that only DOMA’s definitions could be recognized for FMLA leave purposes. As a result, FMLA leave has not been made available to same-sex spouses.

 

That changes yesterday, at least in part.

 

What’s Clear about FMLA After the Ruling

 

In striking down a significant part of DOMA, the Supreme Court cleared the way for each state to decide its own definition of “spouse”. Thus, if an employee is married to a same-sex partner and lives in a state that recognizes same-sex marriage, the employee will be entitled to take FMLA leave to care for his/her spouse who is suffering from a serious health condition, for military caregiver leave, or to take leave for a qualifying exigency when a same-sex spouse is called to active duty in a foreign country while in the military.

 

What’s Unclear about FMLA After the Ruling

 

But what about employees who live in a state that does not recognize same-sex marriage? Are they entitled to FMLA leave to care for their spouses?

 

As an initial matter, the regulations look to the employee’s “place of domicile” (aka state of primary residence) to determine whether a person is a spouse for purposes of FMLA. Therefore, even if the employee formerly lived or was married in a state that recognized the same-sex marriage, he/she is unlikely to be considered a spouse in the “new” state for purposes of FMLA if the state does not recognize the marriage.  This is no small issue, since 30+ states currently do not recognize same-sex marriage and some don’t go all the way (e.g. Illinois, which recognizes same-sex unions, not marriages).

 

Surely, some might argue that the U.S. Constitution requires other states to recognize the marriage; however, this issue is far from settled. Clearly employers need some help from the DOL. It is speculated that the DOL may draft regulations on how employers can administer FMLA in situations where the employee’s spouse is not recognized under state law. This would give life to concepts such as a “State of Celebration” rule, in which a spousal status is determined based on the law of the State where the employee was married and not where they reside. However, without more guidance, it is still too early to tell how the DOL will handle this.

 

Other Key Benefits Affected by the DOMA Decision

 

FMLA is not the only federal law impacted by the fall of DOMA. If federal regulations follow through, some of the notable federal laws and benefits impacted may include:

 

• Taxes: Same-sex spouses likely will share many federal benefits and be able to manage tax liability in a way that opposite sex spouses typically do. For instance, an inheritance, which was taxed under DOMA, will no longer be taxed for a same sex spouse. Income taxes, payroll taxes, health insurance benefits, and tax reporting may also be impacted.

 

 

• Affordable Care Act and COBRA: Some outlets are reporting that the Court’s decision will impact how the Affordable Care Act (alsoreferred to as Obamacare) is carried out, though many details remain unclear. Moreover, same-sex spouses may be eligible for continuation of health insurance benefits (COBRA) even though the spouse may lose his/her job.

 

 

• Employee benefits: Same-sex spouses likely will be treated equally when it comes to employee benefits, including a 401(k) plan.

 

 

• Social security benefits: The Court’s decision also paves the way for social security survivor benefits to continue onto a legally married same-sex partner.

 

• Citizenship: According to NBC News, some 28,000 same-sex spouses who are American citizens will now be able to sponsor their non-citizen spouses for U.S. visas and can qualify for immigration measures toward citizenship.

Model Exchange Notice for Employers Released By DOL

A provision of Health Care Reform requires employers to provide a notice to all employees regarding the availability of health coverage options through the state-based exchanges. The Department of Labor delayed the original requirement that the notice be distributed by March 1, 2013, as it was determined that there was not enough information regarding exchange availability.

 

 

The DOL recently issued temporary guidance along with a model notice. The DOL has issued the model notice early so employers can begin informing their employees now about the upcoming coverage options through the marketplace.

 

 

Two model notices were released by the DOL. One is for employers who currently offer medical coverage and the other is for those who do not offer medical coverage.

  

 

Employers are required to issue the exchange coverage notice no later than October 1, 2013. This will coincide with the beginning of the open enrollment period for the marketplace.

 

The notice must be provided to all employees, regardless of their enrollment on the group health plan. It must be provided to both full time and part time employees as well. Employers are not required to provide a separate notice to dependents. Employers will need to provide the notice to each new employee (regardless of their status) who are hired on or after October 1, 2013 within 14 days of their hire.

 

 

An exchange coverage notice must include –

 

• information about the existence of the exchange, including a description of the services provided by the exchange and how to contact the exchange;

 

• a statement that the employee may be eligible for subsidized exchange coverage (i.e., premium tax credit under Internal Revenue Code § 36B), if the employee obtains coverage through the exchange and the employer’s plan fails to meet a 60% minimum value; and

 

• a statement that the employee may lose the employer contribution (if any) toward the cost of employer coverage (all or a portion of which may be excludable from income for Federal income tax purposes) if the employee obtains coverage through the exchange.

 

The DOL also modified its model COBRA election notice to include information about the availability of exchange coverage options and eliminate certain obsolete language in the earlier model.

 

 

Please contact our office for a copy of the model notice(s).