News Flash: September 12, 2013 – No Fines for Exchange Notice Failures
 

News Flash: September 12, 2013 – No Fines for Exchange Notice Failures

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    News Flash: September 12, 2013 – No Fines for Exchange Notice Failures News Flash: September 12, 2013 – No Fines for Exchange Notice Failures Document Transcript

    • News Flash: September 12, 2013 – No Fines for Exchange Notice Failures The latest FAQ guidance on the health care reform law is brief and to the point: Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act's new Health Insurance Marketplace? A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice. [emphasis added] Background Under the health care reform law, employers that are subject to the Fair Labor Standards Act must provide a notice to each employee regarding the health insurance exchanges that are to be available starting in 2014 (temporary guidance issued in May refers to exchanges as the “Marketplace”). The notice requirement was originally scheduled to take effect on March 1, 2013, but the requirement was delayed per an announcement in late January. Employers are required to provide the notice starting October 1, 2013, even if they do not make health benefits available to employees. The DOL has provided a model notice, and the notice requirement is more fully explained in our guide on the health insurance exchange notice. Need for Clarification The DOL apparently has been getting a question that has been asked of us recently: Is there really a $100 per day fine for failure to provide the exchange notice by October 1? It is good to have the DOL’s concurrence that no such fine applies to exchange notice failures. At the same time, we are reluctant to suggest that there would not be any potential consequences for an employer that failed to provide the notice. For example, a notice failure might be deemed a breach of fiduciary duty under ERISA. It is unclear, however, what liability would result from establishing that a notice failure amounts to a fiduciary breach. Nonetheless, we concur with the DOL’s admonition that employers “should” provide the exchange notice as prescribed in the temporary guidance. The information in this publication is not intended as legal or tax advice and has been prepared solely for informational purposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.