Update: Michigan Insurance Exchange – Employer to employee letter due date has been postponed

January 28, 2013

By Scott Lyon, SBAM’s Senior Vice President

The Department of Labor has concluded that the notice requirement under FLSA section 18B will not take effect on March 1, 2013 for several reasons. First, this notice should be coordinated with HHS’s educational efforts and Internal Revenue Service (IRS) guidance on minimum value. Second, we 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. The Department of Labor 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.

More about the letter:
Employers must inform their employees about the existence of an Exchange and provide a description of the services that they will be able to receive from the Exchange.

While specific information about our Exchange here in Michigan remains elusive, it is not too early to start to at least draft the letter.

First, the information must be provided in writing in a culturally and linguistically appropriate manner to all employees regardless of whether, or not, they are eligible for your employer sponsored coverage. I haven’t seen where this is specifically defined, but generally this means that if you have employees whose primary language is, for example Spanish, that you must provide this letter in Spanish and that it must be written in a manner that is understandable to your employees. Beyond that, here is what is required:

Inform employees of the existence of the Exchange
General description of the services provided by the Exchange
Contact information for Exchange customer service and appeals
How the employee may be eligible for premium tax credits (assistance) and/or cost sharing reductions if your plan is “unaffordable” (premium contribution for single plan is more than 9.5 percent of W-2 Box 1 income)
Notice that if the employee goes to the Exchange for coverage that they may lose the employer contribution which heretofore has been excludable for federal income tax purposes

In addition to providing this letter to all current employees, you will also be required to provide the same or a similar letter to new employees hired after the to-be-determined due date. For future employees, this letter should be provided at the time of hire.

SBAM will keep our eyes open for any templates of this letter and for the specifics of the information that must be provided. Hopefully, the specific information will start to emerge soon with sufficient time to react and get the letter drafted and distributed to your employees.

For additional details on how Health Care Reform will impact your business, click here.