The Patient Protection and Affordable Care Act added Section 18B to the Fair Labor Standards Act, which requires employers to provide all new hires and current employees with a notice explaining the existence of Exchanges, as well as the potential consequences if an employee purchases a qualified health plan through an Exchange instead of electing coverage through an employer sponsored group health plan. The deadline for distributing this Notice of Exchange was originally to have been March 1, 2013. On January 24th, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the “Departments”) issued FAQs About Affordable Care Act Implementation (Part XI). FAQ #1 provides that until regulations are issued and become applicable, employers are not required to provide the Notice of Exchange. The Departments anticipate that the timing for distributing the Notice of Exchange will be late summer or fall of 2013, which will coordinate with the open enrollment period for the Exchanges.

The Notice of Exchange will need to inform an employee:

• Of the existence of Exchanges, the services provided by the Exchanges, and contact information for the Exchanges if an employee wants assistance
• That he or she may be eligible for a premium tax credit for coverage purchased through the Exchange if the employer plan’s share of the total allowed cost of benefits under the plan is less than 60%
• That if he or she purchases a qualified health plan through an Exchange then:
• he or she may lose the employer contribution (if any) offered through the employer’s group health plan; and
• all or a portion of the employer’s contribution to the group health plan may be excludable from income for Federal income tax purposes.

To assist employers, the Department of Labor is considering providing model language that employers may use to satisfy this Notice of Exchange requirement. The Departments anticipate issuing future guidance that will help employers with meeting these notice obligations. We will keep you updated.