Mandatory Employee Health Insurance Notices: Is Your Company Complying with the Law?

November 9, 2015 Shanah Glick

To read this article in Hebrew click here.

Among the many requirements created by the U.S. Patient Protection and Affordable Care Act (the “ACA”) is a requirement that, with few exceptions, companies with employees in the U.S. must provide all new employees with written information regarding the availability of health insurance and certain potential related costs or savings (such notice, the “Health Insurance Notice”).  Below are answers to some common questions regarding the Health Insurance Notice requirement:

  • If our company offers health insurance to employees, is the company required to provide Health Insurance Notices to new employees?
    • Yes, with few exceptions, employers are required to provide Health Insurance Notices to new employees regardless of whether the employer offers health insurance to its employees, and regardless of whether a particular employee enrolls in an employer-sponsored health insurance plan.
  • What information must be included in a Health Insurance Notice?
    • The Health Insurance Notice must include information regarding:

(i) the existence of government-run health insurance “exchanges” (websites) through which employees may purchase health insurance coverage for themselves and their families;

(ii) the potential availability of a tax credit and/or cost-sharing reduction for an employee who purchases health insurance via an exchange, where such insurance meets certain minimum standards; and

(iii) an employee’s potential loss of employer-related benefits in the event that an employee purchases insurance through an exchange.

Model notices are available via the U.S. Department of Labor’s website at http://www.dol.gov/ebsa/healthreform/regulations/coverageoptionsnotice.html.

If an employer does offer health insurance coverage for its employees, the  model notice calls on the employer to  describe which employees and dependents are eligible for coverage and if the coverage meets certain standards under the ACA. Employers should be careful to make sure all information provided is correct and up-to-date. 

  • At what point is an employer required to provide a Health Insurance Notice to a new employee?
    • Notice should be sent by the employer to the employee within 14 days of the employee’s start date.
  • What happens if an employer does not provide a Health Insurance Notice to a new employee?
    • The U.S. Department of Labor has stated that there is no penalty or fine under the law that mandates the Health Insurance Notice in the event that an employer fails to provide one. Although employers may view the lack of a penalty or fine as making this notice optional, the Health Insurance Notice is clearly required by federal law, and it is too soon to tell if the government will ultimately penalize employers that fail to provide the notice.

For more information about an employer’s obligation to provide Health Insurance Notices to new employees, including the manner in which the notice must be sent and how to complete the notice if your company does offer health insurance, please contact Shanah Glick at 646 328 0793 or sglick@swalegal.com.

Shanah is Counsel at SWA, and is a member of the Corporate practice group of SWA and supports the Labor & Employment practice group, providing advice with respect to the U.S. Patient Protection and Affordable Care Act and other U.S. health insurance related topics.

Her experience includes advising hedge funds, investment banks and other capital market participants with respect to distressed debt transactions, claims trading, securities transactions and regulatory matters.

Shanah can be reached at 646 328 0793 or sglick@swalegal.com

This SWA publication is intended for informational purposes and should not be regarded as legal advice. For more information about the issues included in this publication, please contact Shanah Glick. The invitation to contact is not to be construed as a solicitation for legal work. Any new attorney/client relationship will be confirmed in writing.