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Notice of Health Insurance Exchanges

Posted by Predovich & Company

As you may know, the health care law – the Patient Protection and Affordable Care Act (PPACA) or ObamaCare – requires most individuals (including children and other dependents) to carry health insurance, beginning January 1, 2014.  The law also requires the establishment of a health insurance exchange in all states by October 1, 2013.  The goal is that exchanges, working with private insurers, will act as a marketplace and provide “one-stop shopping” for individuals and families who may need health insurance or who seek less expensive coverage.  A companion program – the Small Business Health Options Program or SHOP Exchange – will assist small businesses that want to offer insurance to their employees.

The Department of Labor indicates employers “should” give the required notices of the health insurance exchange to their employees by October 1, 2013.  This notice requirement applies to employers who are engaged in interstate commerce and have annual gross receipts of $500,000 or greater.  The notice requirement also applies to hospitals, schools, and government agencies.  The IRS has indicated they will not levy penalties against employers who fail to comply with this notice deadline.

Employers should provide notice to their existing employees by October 1, 2013, and must provide notice to new employees hired on or after October 1, 2013.  Each employee must receive notice, regardless of the employee’s health plan enrollment status and part- or full-time employment status.  Notice must be provided in writing or electronically to each employee.

The notice must inform the employee:
  1. Of the existence of the exchange, the services provided by the exchange, and contact information for the exchange.
  2. That he or she may be eligible for a premium tax credit under the Internal Revenue Code if (a) the employer does not offer a health plan or the health plan offered by the employer pays less than 60 percent of the total allowed costs of health benefits offered to the employee; and (b) the employee chooses to purchase health insurance through the exchange.
  3. That an employee who purchases health insurance through an exchange may lose the employer’s (tax-free) contribution to the cost of health insurance offered by the employer.
To satisfy this requirement, the Department of Labor has provided model notices on its website at  The website provides one model for employers who offer a health plan to some or all of their employees, and another model for employers who do not offer a health plan.  Employers may modify the notice, as long as it meets the content requirements described above.
Source: Department of Labor and CCH Intelliconnect


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