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May 10, 2013

HRB 74 - Notice to Employees of Coverage Options; Updated COBRA Model

Released May 10, 2013I Download as a PDF

May 10, 2013 --One of the provisions of the Affordable Care Act (ACA) requires employers to give employees an explanation of the health plan options available under the Marketplace previously known as the exchange.  This requirement was to commence March 1, 2013, but was delayed until future guidance is issued (see prior CBIZ Health Reform Bulletin, Sub-Regulatory Guidance and FAQs Issued, 1/25/13).

Notice of Coverage Options

The Department of Labor has provided some temporary guidance in the form of a Technical Release 2013-02 and two model notices explaining Marketplace options that can be used until future guidance is issued, which is still expected in late summer or early fall.  The requirement to provide the Marketplace notice generally applies to all employers of any size.  It applies to private sector, for profit, and not-for-profit entities as well as to public sector entities. 

The notice must be provided to all new hires.  The temporary guidance says that as long as the notice is provided within 14 days of hire, it will be deemed timely.  For all current employees, the notice must be provided before October 1, 2013.  The model notice for use by employers who offer coverage can be found here.  The model notice for employers who offer no coverage can be found here.  It is notable that both notices require certain employer information (see Part B of each notice).  One can assume this information is being collected so that the Marketplace can contact the employer.

The model notice to be used by employers who offer coverage includes an optional section requesting individualized information about the health plan.  Employers will want to familiarize themselves with the information requested on the notice, particularly the individualized information, as it could create additional administrative burden for the employer. 

In the affordability section, the notice affirms that affordability is determined assuming any tobacco incentive has been achieved.  Presumably, employers who offer a wellness incentive for the first year of compliance can assume that this incentive has been granted too (see prior CBIZ Health Reform Bulletin, Minimum Value and Affordability, 5/9/13).

COBRA Model Election

The Department of Labor has updated the COBRA model election to reflect options available through the Marketplace.  As a reminder, COBRA requires that upon the occurrence of a qualifying event, a COBRA election notice must be sent.  The revised model election notice can be found here

Employers will want to review this model election notice and incorporate the requisite information: 1) reference to the Marketplace and available plans through the Marketplace and, 2) in 2014, no preexisting condition exclusions will be imposed. 

This model election form can be used immediately.


About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.



The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.


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