United Benefit Advisors Insight and Analysis Blog

To Issue the Exchange Notice or Not To? That Is the Question.

By Linda Rowings, Chief Compliance Officer at United Benefit Advisors
  Sep 24, 2013 10:12:00 AM

health care reformBy Linda Rowings
Chief Compliance Officer
United Benefit Advisors

Many employers are uncomfortable foregoing the marketplace/exchange notice, even with the highly unusual DOL release stating that penalties would not be applied to employers that fail to provide the notice. If you fall in this category, we encourage you to provide the notice anyway and have developed a new FAQ document to help you. 

It is difficult to provide reasons why employers should provide the notice in the absence of the penalty, beyond that the requirement is still part of the law and therefore providing the notice is the right thing to do. Some employers have expressed concerns that failing to provide the notice violates ERISA. The notice requirement is under the FLSA and applies to employers and employees, while ERISA applies to plan sponsors and participants, so it seems unlikely this is an ERISA obligation. Further, the Department of Labor enforces both the FLSA and ERISA, and they are the ones that issued the no penalty FAQ.

Other employers have expressed concern that an employee who failed to get a subsidy could claim he missed the subsidy because he did not get the notice. The notice is just one part of the government's effort to publicize the marketplace, and far from the sole way the marketplaces will be publicized. The information on page two of the notice is intended to help the marketplace determine if the employee is subsidy-eligible, but whether a person is eligible for a subsidy will be based on the information the person provides in their application to the marketplace, not the information on page two.

Finally, due to the lack of clear instructions, employers have struggled with completing this form, and some have expressed concerns that the notice will increase, rather than decrease, confusion and create liability for providing inaccurate information.

There is not a "best practice" for handling the notice issue.  Employers that choose not to provide the notice have a reasonable argument that it is not required. Employers that wish to take a more conservative approach and provide the notice also have a reasonable basis for that decision. The new UBA FAQ has been designed to help you if you are proceeding with the notice.

Topics: employee communication, health insurance exchanges, UBA, employee benefits, hr consulting, health care