EBSA Issues Clarification Of Procedure For Notice Of Coverage Options And 90-Day Health Benefits Waiting Period

Third parties may fulfill employers’ obligations to send employees, by Oct. 1, 2013, a notice of coverage options available through state health insurance marketplaces, or exchanges, as set forth in Fair Labor Standards Act (FLSA) Sec. 18B, as added by the Patient Protection and Affordable Care Act (ACA) Sec. 1512, according to frequently asked questions (FAQs) from the Employee Benefits Security Administration (EBSA).

The EBSA cautions employers, however, that they will not be relieved of their statutory duty to provide notices if the other entity chosen to do so merely sends notices to health plan enrollees. All employees, regardless of whether or not they are enrolled in an employer’s health care plan, must be provided with the notices, the EBSA states. Therefore, third parties issuing notices on behalf of an employer should either send them to all employees, or communicate clearly to the employer that they are only sending notices to an enrolled subset of employees. They also should advise employers of their residual obligations with regard to the remaining employees, according to the FAQ. Model notices that can be used to send to employees, along with Technical Release 2013-02, which contains temporary related guidance, are available online at http://www.dol.gov/ebsa/healthreform/.

The FAQ also states that employers may rely on guidance contained in proposed regulations issued on March 21, 2013, with regard to the 90-day waiting period limitation under PHS Act Sec. 2708, which prohibits a waiting period for group health insurance that exceeds 90 days. Under the proposed regulations, waiting periods exceeding 90 days are not permitted for either employees or dependents who are otherwise eligible to enroll under the terms of the plan. Being “otherwise eligible,” for purposes of the proposed regulations, is generally equivalent to meeting the plan’s substantive eligibility conditions, such as being in an eligible job classification. EBSA warns employers, however, that eligibility conditions that are designed to avoid compliance with the 90-day waiting period limitation are not acceptable.

Compliance with the proposed regulations will be considered by the EBSA to equal compliance with PHS Act 2708 at least through 2014. To the extent that any subsequently-issued final regulations are more restrictive than the proposed regulations, they will not be effective, the EBSA says, prior to Jan. 1, 2015.

FAQ Part XVI was issued on September 4 and is available at http://www.dol.gov/ebsa/faqs/faq-aca16.html.

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