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Benefits, Compensation and HR Consulting
August 2013
Affordable Care Act Notice Requirements for Employers: Recap of What’s
Required, Reminder of What’s Coming and How to Make the Most of Them
The Affordable Care Act1 requires employers that sponsor group health plans to prepare and distribute several
new employee notices. This issue of Health Care Reform Insights outlines Affordable Care Act-mandated
communications.2 It reviews the annual obligations already in effect, and notes which additional notice
requirements are expected. These and other legally required communications3 present an opportunity for
employers to stay in touch with their employees and convey strategic messages to them.
Sibson Consulting encourages plan sponsors to use these new required notices as opportunities to create helpful
communications for employees. The notices discussed in this Health Care Reform Insights are required by law, but
they also present an opportunity to contact employees, explain the notices, share other messages and promote and
expand the plan’s electronic communications. The Affordable Care Act can often be misunderstood. Many national
polls show that individuals do not know how the law will affect them or their families. Using a required notice as
an opportunity to provide employees with good, solid information upon which they can rely is a way to effectively
answer questions and also to assure that the human resources department is not overrun with questions when
the Health Insurance Marketplaces4 open for enrollment on October 1, 2013. Employees may also not understand
that their coverage is better — both in terms of costs and coverage — than coverage in the Marketplaces, and may
mistakenly try to enroll in a Marketplace plan. By using a mandated notice as a chance to convey pertinent related
information about the plan and its importance to employees, the employer can help to reduce calls from concerned
employees while promoting appreciation of the benefits the plan provides.
Annual
Communications
Requirements
Already in Effect for
All Health Plans
The Affordable Care Act already requires all employers that sponsor group health plans,
regardless of whether they are grandfathered, to provide the following employee communications annually:
Summary of Benefits and Coverage (SBC) and Uniform Glossary The SBC must
include specific content and be presented in a specified format, including length, font
and boilerplate language. It must be distributed to all eligible employees and beneficiaries. SBCs must be provided with any application for enrollment (including annual
open enrollment) and upon request. Sponsors of plans that do not conduct annual open
enrollment must provide the SBC 30 days before the start of the plan year.5 Recent
guidance on the SBC includes an updated form that requires information as to whether
or not the plan meets the 60 percent minimum value standard. This standard is related to
the shared responsibility penalty for employers as well as the eligibility of employees and
their family members for premium assistance tax credits in the Marketplaces.
1
he Affordable Care Act is the abbreviated name for the Patient Protection and Affordable Care Act (PPACA), Public Law No. 111-148, as modified by the subsequently
T
enacted Health Care and Education Reconciliation Act (HCERA), Public Law No. 111-152.
2
This Health Care Reform Insights does not discuss other reporting and disclosure requirements, such as the annual reports of health coverage that will likely be first due to
the Internal Revenue Service in 2016.
3
ther communications requirements include the following: Children’s Health Insurance Program Notices, Women’s Health and Cancer Rights Act, and HIPAA Special
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Enrollment Rights notices, which currently must be distributed annually; the Medicare Part D Notice of Creditable Coverage, which must be sent annually, where applicable;
and a reminder about where to find the plan’s HIPAA Notice of Privacy Practices, which must be sent every three years.
4
The Health Insurance Marketplaces are the federal government’s new name for what the Affordable Care Act refers to as Health Insurance Exchanges.
5
more information about the SBC, see Sibson’s March 2012 Bulletin, “Final Rule Issued on Summary of Benefits and Coverage Required by the Affordable Care Act”:
For
http://www.sibson.com/publications/bulletins/march2012SBC.pdf
Health Care Reform Insights
Advance Notice of Material Modification Sponsors of plans that make a mid-year
modification to benefits that are described in the SBC must provide notice of that
change at least 60 days before the change goes into effect. One way to provide
this notice would be to revise the SBC and provide it to employees and their
family members.
Notice of Health Insurance Marketplace This notice to be sent by employers is
intended to inform employees of the existence of the Marketplace and to provide
information about how Marketplaces work. Employers must send the notice to current
employees by October 1, 2013. New hires must receive the notice at the time of hire,
starting October 1, 2013. The notice must inform employees of coverage options under
the Marketplaces. The notice must also inform employees that they may be eligible for
federal premium subsidies in the Marketplaces, and that if employees purchase a Marketplace plan, they may lose the employer contribution (if any) to the plan. In May 2013,
the Department of Labor published two models for the notice — one for employers who
do not offer a health plan and another for employers who do offer a health plan to some
or all employees. Employers may use one of these models or create their own notice
(as long as it meets the content requirements).6
Internal Revenue Service (IRS) Form W-2, Wage and Tax Statement Employers
must now report the cost of coverage under employer-sponsored group health plans in
Box 12 (using code DD) on the Form W-2. This requirement took effect with the 2012
W-2s issued in January 2013. For now, employers that issued fewer than 250 W-2s in
the previous year are exempt from this requirement.7
Additional 2013
Requirement for
Trustees of Plans
Granted a Waiver
of Annual Limits
Sponsors of plans that have been granted a Waiver of Annual Limits must issue an
Annual Notice of Waiver of Annual Limits to notify employees that the health plan does
not meet the minimum annual limits for essential benefits and has received a Waiver
of that requirement.8 The notice language and format (font size) are prescribed by the
Centers for Medicare & Medicaid Services (CMS). The Waiver Notice must be sent to all
current or eligible employees or subscribers. Waivers will expire for the plan year beginning on or after January 1, 2014.9
Statement Already
Required for
Communications
Issued by Trustees
of “Grandfathered”
Plans
Sponsors of plans that are grandfathered under the Affordable Care Act10 have an additional communication requirement. They must include a Statement of Grandfathered
Status on all benefits communications.
This statement must explain what a grandfathered health plan is and must indicate
that some provisions of the Affordable Care Act do not apply to grandfathered plans. The
Continued on next page
6
For more information about the guidance, see Sibson’s June 27, 2013 Capital Checkup, “Federal Government Releases Model Employer Notice under the Affordable Care
Act and Revised Model COBRA Election Notice”: http://www.sibson.com/publications-and-resources/capital-checkup/archives/?id=2377
7
The
latest IRS guidance on form W-2 reporting under the Affordable Care Act is Notice 2012-9, which was released in January 2012: http://www.irs.gov/pub/
irs-drop/n-12-09.pdf
8
For 2013, a plan cannot have an annual dollar limit on essential benefits that is less than $2 million unless the plan has received a Waiver.
9
For information about this notice requirement see Sibson’s June 22, 2011 Capital Checkup, “Annual Limit Waiver Process Ending; Plans May Apply for Extensions of
Existing Waivers”: http://www.sibson.com/publications-and-resources/capital-checkup/archives/?id=1656
10
2
roup health plans in existence as of March 23, 2010, when the Affordable Care Act was signed into law, are grandfathered, meaning that they do not have to comply with
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many of the law’s requirements. A plan will remain grandfathered for as long as the plan’s benefit design does not change too much. If certain types of changes are made to
a plan’s design, the plan will generally lose its grandfathered status when those changes take effect.
Health Care Reform Insights
Employee Benefits Security Administration has prepared model language for
this statement.11
Additional,
Current Required
Communications
for Trustees of
Non-Grandfathered
Plans
Sponsors of non-grandfathered plans have additional communications requirements, which
are summarized below. These notices are required for plan years beginning on or after
September 23, 2010 for non-grandfathered plans. When a plan loses its grandfathered
status, the sponsor should review all requirements applicable to non-grandfathered plans,
and assure that all notices are prepared.12
Disclosure of Patient Protections Employers that require employees to designate
a primary care provider must notify employees of their right to designate a Primary Care
Physician (PCP). For children the PCP may be a pediatrician. Women must be notified
of their right to have direct access to OB/GYN services. This disclosure of patient
protections must be included in the SPD and other communications that describe the
plan’s benefits.
Revised Internal Claims and Appeals Procedures The claims and appeals procedures
must be included in the SPD.
Notices about the Voluntary External Review Process Sponsors of non-grandfathered plans must send a Notice of Completion of Preliminary Review to the claimant
who requests an external review. Moreover, if the plan sponsor reverses its decision
based on additional information received from the Independent Review Organization
(IRO) before the IRO completes its review, it must provide notice of the reversal to the
claimant and the IRO.
In addition, the IRO must send two notices to employees about the external review process. Upon assignment, the IRO must notify the claimant whether the request is eligible
— and accepted — for external review and explain how the claimant may submit additional
information. Later, the IRO will provide the claimant with a Notice of Final External Review
Decision. Although these notices are the responsibility of IROs, plan sponsors should be
aware of how this aspect of the Affordable Care Act is being communicated to employees.
Current Required
Communication
for Early Retiree
Reinsurance
Program (ERRP)
Participants
The ERRP, which was introduced as a temporary part of the Affordable Care Act, reimburses employment-based plans for a portion of claims incurred by early retirees age 55 or older
who are not eligible for Medicare. Although ERRP was closed in 2012 when program funds
were exhausted,13 sponsors of plans that received ERRP funds must provide new employees with a Notice about the ERRP for as long as the plan is receiving and/or spending
ERRP funds. (This notice does not have to be redistributed to current employees.)
Another
Communications
Requirement
Coming Soon
Employers with more than 200 full-time employees will be required to enroll their employees automatically in one of their employer-sponsored health plans and must provide
employees with adequate notice of the automatic enrollment, as well as the opportunity for
Continued on next page
11
That model language is available on the following page of the DOL website: www.dol.gov/ebsa/grandfatherregmodelnotice.doc
12
For information about the rules for non-grandfathered plans, see Sibson’s March 2013 Health Care Reform Insights, “The Consequences of Losing ‘Grandfathered’
Status”: http://www.sibson.com/publications/HCRI/march2013nonG.pdf
13
or more information about the end of ERRP, see Sibson’s January 3, 2012 Capital Checkup, “ERRP Comes to a Close: Helping Plan Sponsors Keep What They Have
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Received”: http://www.sibson.com/publications-and-resources/capital-checkup/archives/?id=1784
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Health Care Reform Insights
employees to opt out of any coverage in which they were automatically enrolled. Further
guidance on this notice, and the effective date is expected, but it is not likely to take effect
in 2014.
Notice Required by
the Consolidated
Omnibus Budget
Reconciliation Act
(COBRA)
While not expressly addressed in the Affordable Care Act, it is likely that a plan’s COBRA
notices will need to change to reflect the realities of the new insurance Marketplaces.
COBRA participants will have new choices for coverage, and will need information about
how their COBRA coverage compares to health insurance coverage they can purchase
on the new insurance Marketplaces. The DOL has issued a revised model COBRA notice, but has not published requirements about when to use it. The Treasury Department
and the IRS have issued proposed guidance about when a COBRA participant is eligible
for a premium assistance tax credit, but the rules are not yet final. Generally, a COBRA
qualified beneficiary may choose between COBRA and Marketplace coverage, but there
is some question in the Treasury Department guidance as to whether an individual who
is eligible for COBRA based on a reduction in hours could also be eligible for a premium
assistance tax credit in the Marketplaces. Plan sponsors should monitor federal guidance
to determine what the final rules will be about how COBRA interacts with the Marketplaces, and should be prepared to modify COBRA notices when that guidance is finalized.
Distribution Dos
and Don’ts
Although the federal government has issued very strict rules about how some of the
Affordable Care Act notices can be presented and what they need to say,14 it is permissible to send the notices with a cover letter. Sending a cover letter gives the employer
a chance to explain the required notice in the plan’s own terms and to convey other
messages about health coverage or health promotion. For example, cover letters might
communicate a smoking-cessation program, encourage participation in wellness programs, remind employees to get a flu shot or an annual physical or educate them about
the importance of seeking care from network providers. Plan sponsors may also want to
take the opportunity to remind employees about other benefits the plan provides, such as
full coverage of preventive services with no copayments or reduced costs when the mailorder service is used.
Even when applicable rules require that notices be printed and mailed to employees, the
notices can also be posted to the plan’s website, where the plan can put them in context,
explain the notices and provide links to other related benefits information. This is a good
way to increase traffic to the employer’s website and to save on printing and mailing costs
when employees call to say they cannot find their copy of the notice or want another copy.
They can simply be directed to the website.
With all of these new communications being sent to employees by different sources
(the plan, employers and the IRO, where applicable), the plan may also want to consider
utilizing social media channels to communicate with employees. A video could be used to
introduce the new communications and to let employees know what to expect and where
they can go (e.g., the plan’s website) for more information. Under certain circumstances,
the plan could also use e-mail, text messaging or Twitter to alert employees to upcoming
deadlines, mailings and other plan news. Many plans are already linking the required
Continued on next page
14
4
Model language and detailed regulations for the notices listed in this Health Care Reform Insights, as well as information about other government reporting
requirements, are on the Department of Labor, Internal Revenue Service and Centers for Medicare and Medicaid Services’ Center for Consumer Information & Insurance
Oversight websites.
Health Care Reform Insights
notices to their growing electronic access portals, including websites, social media
channels and employee benefit enrollment sites.15 Trustees may want to consider taking
advantage of these alternative channels of communication.
Making the Most of
Communications
Required by the
Affordable Care Act
Plan sponsors might consider taking advantage of these mandated opportunities to communicate with employees and start incorporating the notices into their overall communications strategies. Plan sponsors can:
Use notice requirements as opportunities to communicate other messages,
Incorporate the mandated communications into the existing open enrollment booklet
and summary plan description (SPD),
Plan to have notices completed by the time of open enrollment so that the Affordable
Care Act notices can be combined into one mailing, instead of several,
Enhance and expand electronic communications,
Include required notices in new employee welcome packages, and
Consider how social media can also help to present a consistent message about
plan benefits.
15
Electronic notices must comply with applicable electronic disclosure rules, which can vary depending on the type of material being communicated.
Beyond the Notices: Other Affordable Care Act Communications Requirements
When considering the new communications required by the Affordable Care Act, it is important to keep in mind that
plans will also need to communicate benefit changes required by the Affordable Care Act. Examples include the
expansion of coverage for women’s health services, the removal of annual benefit limits or the requirement
that preventive health screenings be provided with no copayments. Answers to frequently asked questions
(FAQs) posted in February 2013 by the federal agencies responsible for implementing the Affordable Care Act
clarified that non-grandfathered plans must cover — with no copayment (in-network) — aspirin and certain other
over-the-counter (OTC) products, contraceptives (including OTC methods, management and device removal),
lactation counseling and equipment, BRCA genetic testing for breast cancer* and the removal of a polyp during a
preventive colonoscopy.**
Plans that have lost grandfathered status have a range of new benefit mandates applicable for plan years beginning
on or after January 1, 2014. These include new rules for out-of-pocket maximums, coverage of routine costs related
to approved clinical trials, and provider nondiscrimination rules.***
* BRCA is an abbreviation for breast cancer antigen. BRCA 1 and 2 are gene mutations associated with an increased risk of breast and
ovarian cancer.
** The answers to those FAQs were summarized in Sibson’s March 12, 2013 Capital Checkup, “New Guidelines on Preventive Care Benefits
for Non-Grandfathered Plans”: http://www.sibson.com/publications-and-resources/capital-checkup/archives/?id=2318
*** For information about these rules, see Sibson’s March 2013 Health Care Reform Insights, “The Consequences of Losing ‘Grandfathered’
Status”: http://www.sibson.com/publications/HCRI/march2013nonG.pdf
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Health Care Reform Insights
Employers should rely on their attorneys for authoritative advice on the interpretation and application of the Affordable Care
Act. Sibson can be retained to work with employers and their attorneys on compliance issues. In addition, Sibson can help
employers to evaluate their current plan design and draft employee communications. Sibson will keep clients informed as
additional regulations are issued.
www.sibson.com
To receive issues of Health Care Reform Insights and other Sibson Consulting publications as soon as they are available
online, register your e-mail address via Sibson’s website: www.sibson.com/register/
All Sibson information about health care reform is accessible from the following web page: www.sibson.com/publicationsand-resources/health-care-reform/
For a list of Sibson offices, visit www.sibson.com/about-us/contact-us-locations/
Sibson is a member of The Segal Group (www.segalgroup.net).
Copyright © 2013 by The Segal Group, Inc. All rights reserved.