Important Information about the Employee Notice of Coverage Options

The Department of Labor (DOL) has issued temporary guidance about the Employee Notice of Coverage Options, formerly the Notice of the Exchange. Additional information on the Notice is provided below. Employers are not required to provide Notices under this temporary guidance and can wait until formal guidance is provided later this year.

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The Notice is applicable to all employers that are subject to the Fair Labor Standards Act (FLSA). This includes most employers, regardless of size. Employers must submit the Notice to all current employees by October 1, 2013, and to new hires within 14 days of their employment start date, at least for 2014.

The Notice must be provided free of charge, in writing and delivered either by mail or electronically, in accordance with ERISA standards for electronic delivery. It must be provided to all full-time and part-time employees, regardless of whether (1) the employer sponsors coverage, or (2) the employee is enrolled in an employer-sponsored medical plan. It does not need to be sent to dependents.

Among other requirements, which we outlined in our May 10 Health Care Reform News Alert, the Notice must inform employees that if their plan is not affordable or does not meet minimum value, they may be eligible for a subsidy on the Exchange, otherwise referred to as the Marketplace.

Employers must indicate on the Notice whether the plan meets these criteria by checking a box that states, “If checked, this coverage meets the minimum value standard, and the cost of this coverage to you is intended to be affordable, based on employee wages.”

For purposes of the Notice, you can determine whether your plan provides "minimum value" by using the Health and Human Services (HHS) minimum value calculator, adhering to one of the "safe harbors” identified in the rules, or by consulting with your actuarial advisor. The safe harbors are noted in our employer mandate fact sheet. At this point, it’s still our understanding that employers will need to include the minimum value information on the Notice. The recent employer mandate delay did not reference any impacts or changes for the Notice.

Based on the HHS tools for plans effective January 1, 2014 and forward, an example of a plan that meets the Minimum Value standard would have a deductible of $5,000, coinsurance of 70%, and an Out of Pocket (OOP) maximum of $6,350. The plan would also need to include pharmacy coverage.

Please see our February 27 News Alert for additional information on the HHS tools.

We are expecting the DOL to issue additional guidance on the Employee Notice of Coverage Options in late summer/early fall, and will be in touch again when that happens.

Meanwhile, we encourage you to bookmark InformedOnReform for the latest on health care reform, and to contact your Cigna representative with questions.