The Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury Jan. 24 released a set of frequently asked questions (FAQs)
related to implementation of provisions in the Patient Protection and Affordable Care Act (PPACA), including notice of coverage requirements and compliance of Health Reimbursement Arrangements (HRAs) with the Public Health Service Act.
Notice of Coverage Requirements
Section 18B of the Fair Labor Standards Act (FLSA), as added by section 1512 of PPACA, mandates applicable employers comply with regulations promulgated by the Secretary of Labor and provide each employee at the time of hiring with a written notice informing the employee:
1. Of the existence of Exchanges including a description of the services provided by the Exchanges, and the manner in which the employee may contact Exchanges to request assistance;
2. If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code if the employee purchases a qualified health plan through an Exchange; and
3. If the employee purchases a qualified health plan through an Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
This provision originally was scheduled to go into effect March 1, 2013; however the FAQs confirm that the effective date will be delayed.
The DOL has concluded that the notice requirement under FLSA section 18B will not take effect on March 1 for several reasons. First, this notice should be coordinated with HHS’ educational efforts and Internal Revenue Service (IRS) guidance on minimum value. Second, the departments are 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. DOL expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.
In addition, DOL is considering providing model, generic language that could be used to satisfy the notice requirement. As a compliance alternative, DOL also is considering allowing employers to satisfy the notice requirement by providing employees with information using the employer coverage template.
Future guidance on complying with the notice requirement under FLSA section 18B is expected to provide flexibility and adequate time to comply.
Health Reimbursement Arrangement
The FAQs also contain guidance on how Health Reimbursement Arrangements can comply with the Public Health Service Act section 2711.