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).

Using Exit Interviews to Prevent Disaster

Current as well as former employees have information that could prevent accidents and disasters and it is up to HR to gather it and help solve problems that could lead to future catastrophes.

 

“The sooner you can get the feedback the better, because you can solve problems before it is too late,” said Beth Carvin, the president and CEO at Nobscot Corp., an HR technology company that specializes in employee retention and development.

 

She feels that HR should be conducting exit interviews, especially in high risk occupations like health care, to identify any areas that may put the company, its customers, and consumers at risk.

 

Case in point is the fungal meningitis outbreak in late 2012 among patients who received contaminated steroid injections. The main focus of the investigation of this disaster was the New England Compounding Center (NECC), a pharmacy in Massachusetts, but ex-employees of Ameridose, a drug manufacturer that shared many of the same owners as NECC, came forward later with claims that NECC’s corporate culture encouraged shortcuts even if it compromised safety.

 

According to The New York Times, one ex-quality control technician at Ameridose stated that he was overruled by management when he tried to stop the production line when he spotted missing labels. An ex-pharmacist said she resigned because she was worried that unqualified people were preparing dangerous narcotics for use by hospitals. A salesman shared that he was allowed into the sterile lab to help out with packaging and labeling during rush orders, without any prior training.

 

Employees, as shown, had strong concerns about business practices as both the NECC and Ameridose. Carvin expressed that this case is a big reminder of how important getting this kind of feedback in an exit interview is. Collecting data like this during an exit interview may have allowed someone in HR to make changes before the fungal meningitis disaster occurred.

 

A Listening Culture

 

So how exactly can HR use employee feedback to prevent a costly tragedy?

 

One of the first steps is to create and maintain a work environment and company culture where open communication is encouraged.

 

Employees should feel comfortable to share their concerns on policies and practices, especially when they relate to safety and compliance. It is important to create a culture where you listen to your employees and they actually believe that you are listening. 

 

Once you provide opportunities for employees to give feedback, you must then also act upon it, Carvin advised.  This is the challenge that faces HR. You get busy and may not have time to deal with the feedback collected, but in order to becoming a listening culture, you should try to act on the information you receive from employees.

 

And it is important to communicate this to employees as well. If you implement something based on employee feedback, let them know that you are doing this as a result of employee feedback. The more you do that, the more feedback you will end up receiving.

 

Make The Business Case

 

Managers also need to be trained on the importance of balancing business needs with safety and to take frontline employee concerns seriously.

 

Carvin explained that this is where HR needs to be involved. “In the contaminated steroid tragedy, if HR had identified that safety was being set aside in favor of speed, they could have made a case to senior management for why this was bad not just from a consumer safety standpoint but also from a business prospective”.

 

Especially in high risk occupations, HR should analyze the information for trends and share important findings and recommendations with senior management. HR can then help facilitate discussions and set up task forces for the next steps.

 

How to Gather Employee Feedback

 

The key to gathering employee feedback is a systematic approach.  Employee responses should be gathered in such a way that they transform from anecdotal stories (most often collected from a few disgruntled employees) into information that help shine light on specific and objective trends.

 

You need to be able to show your data is transforming from the anecdotal, which senior management will typically write off, to being aggregated and tracked. You will begin to notice that an issue will come up from not just one person but three or four, and then maybe seven, as your data builds up over time.

 

In exit interviews, you want to go beyond the “Why did you leave?” questions. You want to have employees rate the company on a number of factors like the work environment, direct supervisors and senior management, and try to get feedback on all aspects of their workplace experience. This is when you will see the issues start to come out.

HR staff should use both quantitative and qualitative ratings, noted Carvin. The quantitative points to where the issues are while the qualitative lets you understand the data better as it lets you know what the concern is.

 

To get the most out of an exit interview, Carvin suggests HR should break the data down into departments. Each department may have its own concerns, even among job types. You could then break the data down even further into gender and race and really pinpoint issues before they get bigger.

Pay or Play…That is the Question (Part 3)

The Patient Protection and Affordable Care Act (the “ACA”) adds a new Section 4980H to the Internal Revenue Code of 1986 which requires employers to offer health coverage to their employees (aka the “Employer Mandate”). The following Q&As are designed to deal with commonly asked questions.  These Q&As are based on proposed regulations and final regulations, when issued, may change the requirements.

 

Question 3: When Is the Employer Mandate Effective and What Transition Rules Apply?

Large employers are subject to the Employer Mandate beginning on January 1, 2014. However, the effective date for employers that have fiscal year health plans is deferred if certain requirements are met. There are also special transition rules for offering coverage to dependents, offering coverage through multi-employer plans, change in status events under cafeteria plans, determining large employer status, and determining who is a full-time employee.

Fiscal Year Health Plans

An employer with a health plan on a fiscal year faces unique challenges concerning the Employer Mandate. Because terms and conditions of coverage may be difficult to change mid-year, a January 1, 2014 effective date would force fiscal year plans to be compliant for the entire fiscal 2013 plan year. Recognizing the potential burdens, the IRS has granted special transition relief for employers that maintained fiscal year health plans as of December 27, 2012. Both transition relief rules apply separately to each employer in a group of related employers under common control.

 

• Rule #1- employers will not be subject to a penalty on the basis of any full-time employee who (under a fiscal year plan in effect as of 12/27/12) would be eligible for coverage as of the first day of the 2014 fiscal plan year. The transition rule applies only if such employee is offered coverage, no later than the first day of the 2014 plan year, that otherwise meets the requirements of the Employer Mandate.

   

• Rule #2- an employer has one or more fiscal year plans (that have the same plan year as of December 27, 2012) and, together, either cover at least 25% of the employees or offered coverage to at least one third of the  employees during the most recent open enrollment period that ended prior to December 27, 2012. If one of these prerequisites is met, the employer will not be subject to a penalty on the basis of any full-time employee who (i) is offered coverage, no later than the first day of the 2014 plan year, that otherwise meets the requirements of the Employer Mandate, and (ii) would not have been eligible for coverage under any calendar year group health plan maintained by the employer as of December 27, 2012.

   

Coverage of Dependents

Large employers must offer coverage not just to their full-time employees but also to their dependents to avoid the Employer Mandate penalty. A “dependent” for this purpose is defined as a full-time employee’s child who is under age 26. Because this requirement may result in substantial changes to eligibility for some employer-sponsored plans, the IRS is providing transition relief for 2014. As long as employers “take steps” during the 2014 plan year to comply and offer coverage that meets this requirement no later than the beginning of the 2015 plan year, no penalty will be imposed during the 2014 plan year solely due to the failure of the employer to offer coverage to dependents.

Multiemployer Plans

Multiemployer plans represent another special circumstance because their unique structure complicates application of the Employer Mandate rules. These plans generally are operated under collective bargaining agreements and include multiple participating employers. Typically, an employee’s is determined by considering the employee’s hours of service for all participating employers, even though those employers generally are unrelated. Furthermore, contributions may be made on a basis other than hours worked, such as days worked, projects completed, or a percentage of earnings. Thus, it may be difficult to determine how many hours a particular employee has worked over any given period of time.

To ease the administrative burden faced by employers participating in multiemployer plans, a special transition rule applies through 2014. Under this transition rule, an employer whose full-time employees participate in a multiemployer plan will not be subject to any Employer Mandate penalties with respect to such full-time employees, provided that:

 

(i) the employer contributes to a multiemployer plan for those employees under a collective bargaining agreement or participation agreement

 

(ii) full-time employees and their dependents are offered coverage under the multiemployer plan, and

 

(iii) such coverage is affordable and provides minimum value.

This rule applies only to employees who are eligible for coverage under the multiemployer plan. Employers must still comply with the Employer Mandate under the normal rules with respect to its other full-time employees.

Change in Status Events under Fiscal Year Cafeteria Plans

The IRS has also issued transition rules that apply specifically to fiscal year cafeteria plans. Under tax rules applicable to cafeteria plans, an employee’s elections must be made prior to the beginning of the plan year and may not be changed during the plan year, unless the employee experiences a “qualifying event”. An employee’s mid-year enrollment in health coverage through an Exchange or in an employer’s health plan to meet the obligation under the ACA’s individual mandate to obtain health coverage is not a “qualifying event” under the current cafeteria plan rules.

The IRS addresses this by providing that a large employer that operates a fiscal year cafeteria plan may amend the plan to allow for mid-year changes to employee elections for the 2013 fiscal plan year if they are consistent with an employee’s election of health coverage under the employer’s plan or through an Exchange. Specifically, the plan may provide that an employee who did not make a Sec. 125 election to purchase health coverage before the deadline for the 2013 fiscal plan year is permitted to make such an election during the 2013 fiscal plan year, and/or that an employee who made a Section 125 election to purchase health coverage is permitted to revoke/change such election once during the 2013 fiscal plan year, regardless of whether a qualifying event occurs with respect to the employee.

This transition rule applies only to elections related to health coverage and not to any other benefits offered under a cafeteria plan. Any amendment to implement this transition rule must be adopted no later than December 31, 2014 and can be retroactively effective if adopted by such date.

Determining Large Employer Status and Who is a Full-Time Employee

The IRS has also issued transition rules for determining large employer status and determining who is a full-time employee. In general, large employer status is based on the number of employees employed during the immediately preceding year. In order to allow employers to have sufficient time to prepare for the Employer Mandate before the beginning of 2014, for purposes of determining large employer status for 2014 only, employers may use a period of no less than 6 calendar months in 2013 to determine their status for 2014 (rather than using the entire 2013 calendar year).