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A Job for Employers: Tell Workers About Online Insurance Marketplace

Whether they offer coverage or not, employers must get the word out about online exchanges -- by October 1

Joan Fusco, director of research and information for Savoy Associates in Hamilton.
Joan Fusco, director of research and information for Savoy Associates in Hamilton.

New Jersey’s employers are expected to be a key channel for informing their workers about the new health insurance marketplace or exchange, but many are confused about what exactly the government wants them to do.

Under the 2010 Affordable Care Act, employers must notify employees about the existence of the marketplace, a one-stop online shop for purchasing insurance and learning about eligibility for subsidies. The marketplace will begin enrolling residents on October 1 for insurance coverage starting on January 1, 2014.

But with 11 days to go until the marketplace is launched, many employers are still uncertain about what they are required to do, according to business experts.

“There’s a lot of confusion and I think employers who want to comply with the law don’t know what their responsibilities are,” said Christine Stearns, vice president of health and legal affairs for the New Jersey Business & Industry Association.

The requirement to notify employees about the health exchange affects all employers covered by the Fair Labor Standards Act, which is the vast majority of them -- including those that offer insurance. That’s because all Americans are eligible to purchase insurance through the marketplace, even though only those who aren’t offered affordable coverage by their employers are eligible for subsidies.

The written notice must be delivered by October 1, either by mail or electronically. While there is no government penalty for failing to comply, legal experts say employers will open themselves up to lawsuits from workers if they don’t provide the notices.

According to Stearns and others, the notices must describe what the marketplace is and inform employees that they may be eligible for subsidies to buy insurance if the employer doesn’t offer them coverage. It also must include details of any coverage the employer does offer.

The federal Department of Labor provides examples of notices for companies that offer employees insurance and for those that don’t offer coverage.

Joan Fusco, director of research and information for Hamilton-based Savoy Associates, has been advising employers on how state and federal healthcare law affects them. She said some business owners mistakenly believe that they would be fined under the Employer Retirement Security Income Act for failing to provide the marketplace notifications. Noncompliance does not carry a fine.

However, “we are strongly urging employers to provide it, so people know there is an exchange,” avoiding employee anger at a later date, Fusco said.

Larger employers will be required to pay penalties if they have employees purchase subsidized insurance through the exchange.

Starting in 2015 if a company with more than 50 employees doesn’t offer insurance and has at least one worker who receives a federal subsidy, it will have to pay a penalty of $2,000 for each of its total number of employees, minus an allowance of 30 employees. For example, if an employer with 75 full-time workers doesn’t offer health insurance and has at least one employee receiving a subsidy for purchasing insurance through the marketplace, then it will have to pay the $2,000 penalty for 45 workers, for a total of $90,000. If an employer with more than 50 workers does offer insurance but coverage is either unaffordable or inadequate according to the ACA, then the penalty will be $3,000 for each full-time employee receiving a subsidy.

Patti Goldfarb, owner of Employee Benefits Advisors Group of Ridgefield Park, said employers who fail to notify their workers about the marketplace run the risk of being sued. Her business serves as an insurance broker and advises employers on benefits.

“Just out of common decency, I think you should be notifying employees about the exchange,” Goldfarb said.

The law firm Mazursky Constantine LLC recently advised clients that “a blatant disregard of the requirement to provide the exchange notice could expose an employer to lawsuits if one or more employees are unhappy with their coverage situations.”

When federal officials issued a one-year delay in the mandate that employers provide coverage or pay a penalty, pushing it off from January 1, 2014, to 2015, they further confused some employers about the notification requirement.

“The minute you delayed that penalty, everybody said . . . we don’t have to do anything, we have another year where we can stick our heads back into the sand,” said Goldfarb, adding that this attitude on the part of employers is incorrect.

While the mandate for larger employers to offer coverage has been pushed back by a year, all employers are still required to notify their workers about the marketplace by October 1.

She attributed the confusion of employers and others to New Jersey's failure to advertise the marketplace. She would like to see the state use funds it received from the federal government to get the word out.

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