Benefits and Compensation

DOL Issues Model Notice/Guidance on Exchange Options, also Updates COBRA Election Notice

Employers wanting to get an early start on providing a required notice to employees of coverage options under health insurance exchanges just got some help from the federal government. On May 8, the U.S. Department of Labor issued a model notice for employers may use now — but must use beginning Oct. 1, 2013. The agency also issued temporary guidance in Technical Release No. 2013-02 that explains notice distribution procedures. As part of this process, DOL updated the model election notice for COBRA coverage purposes to reflect alternatives offered through the exchanges.


Beginning Jan. 1, 2014, individuals and employees of small businesses will have access to coverage through health insurance exchanges (now Health Insurance Marketplaces). Open enrollment through the marketplaces begins Oct. 1, 2013.

The health reform law amended Section 18B of the Fair Labor Standards Act to require that employers provide employees at the time of hiring (or regarding current employees, initially no later than March 1, 2013), a written notice: informing employee of a marketplace coverage options.

In January 2013, DOL delayed the notice requirement, but received several requests from employers seeking a model notice much earlier so they can inform employees now about their marketplace options. As a result, it issued the model notice and the guidance.

There are two model notices: (1) a notice for employers that do not offer a health plan; and (2) another model for employers that offer a health plan to some or all employees.

As the statute provides, the notice must: (1) include information on the existence of a new marketplace, contact information and a description of services provided; (2) inform employees that they may be eligible for a premium tax credit if they purchase a QHP through the marketplace; and (3) include a statement informing employees that if they purchase a QHP, they  may lose any employer plan contribution and all or a portion of that contribution may be excludable from income for tax purposes.

Employers must provide the notice to each new employee at the time of hiring, beginning Oct. 1, 2013. For 2014, DOL will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. Regarding workers who are current employees before Oct. 1, 2013, employers must provide the notice not later than that date. The notice must be provided automatically, free of charge, and can be distributed via first-class mail or electronically.

Tweaks Made to COBRA Election Notice

Generally, covered employees and dependents in most group health plans can elect COBRA continuation coverage if they incur certain “qualifying events” (such as a termination of employment). Plan administrators much provide these “qualified beneficiaries” with a COBRA election notice within certain time frames. DOL COBRA notice regulations specify more than a dozen content requirements of such notices, and the agency has a model election notice that plan administrators may use to satisfy those requirements.

DOL noted in the technical release that some qualified beneficiaries eligible for a premium tax credit and/or may want to consider and compare alternatives to COBRA coverage available through the marketplace. Accordingly DOL’s model COBRA election notice was revised to reflect the marketplace options as well as reform’s changes to pre-existing condition exclusion rules, and to eliminate language on the Health Coverage Tax Credit, which will be phased out under reform. The notice is available in two forms: a “clean” copy, as well as a redlined version to help identify the changes made.

More details on this guidance can be found in The New Health Care Reform Law: What Employers Need to Know, and Mandated Health Benefits — the COBRA Guide, at


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