Employer Compliance Date for Issuing Notice of Coverage Options Delayed

According to the latest set of Affordable Care Act implementation FAQs posted on the DOL’s website, employers will not be required to comply with the new notice requirements set forth in Section 18B of the Fair Labor Standards Act (FLSA) until further regulations on the requirement are issued and become effective. The Affordable Care Act added the new FLSA section requiring employers to provide new employees upon the date of hire and existing employees by March 1, 2013 information about their health care coverage options through the future health Exchanges. Specifically, these notices must explain the services the Exchanges will provide; whether the employee may be eligible to receive a premium tax credit to purchase insurance through the Exchanges because the employer’s plan does not provide minimum value (i.e., the plan’s share of the total allowed costs of benefits provided under the plan must be at least 60 % of those costs); and that in the event the employee opts to purchase insurance through an Exchange, the employee could lose any employer contribution to any health benefits, and that all or a portion of this contribution may be excludable from income for tax purposes.

The decision to delay the compliance date is based on the DOL’s position that the notice should align with IRS guidance on plan minimum value, and that the agency is “committed to a smooth implementation process including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time.” The DOL anticipates that this notice distribution time will occur in “late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.”

The FAQs also provide guidance on an employer’s provision of health reimbursement arrangements (HRAs) in light of the requirements set forth in section 2711 of the Public Health Service (PHS) Act, which generally prohibits health plans and issuers from imposing lifetime or annual limits on the dollar value of essential health benefits. The guidance explains that the interim final regulations implementing this section made a distinction between HRAs that are "integrated" with other coverage as part of a group health plan and those that are "stand-alone" HRAs. Generally, HRAs that are integrated with other coverage that meets section 2711 requirements need not independently satisfy the requirements, as the total package does so. According to the guidance, the corollary “is that an HRA is not considered integrated with primary health coverage offered by the employer unless, under the terms of the HRA, the HRA is available only to employees who are covered by primary group health plan coverage provided by the employer and meeting the requirements of PHS Act section 2711.” The FAQs provide some explanation as to when an HRA can truly be considered “integrated” with other coverage to comply with the section 2711 requirements.

In addition, the online guidance answers questions related to fixed indemnity insurance; Employer Group Waiver Plans (EGWPs) used to supplement Medicare Part D coverage; and the permissibility of paying Patient-Centered Outcomes Research Institute (PCORI) fees from a multiemployer plan’s assets.

Earlier FAQs (I through X) can be accessed here.

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