You hand an employee a benefits guide and he/she asks: “Should I enroll in the PPO, HMO, or CDHP plan?” Activate canned benefits answer #1: “I can walk you through the different options but you will have to make that decision on your own.”
You then hand an employee a 401(k) guide and he/she asks: “Where should I put my 401(k) money?” Activate canned benefits answer #2: “I can help you understand the different funds but you will have to make that decision on your own.”
Chances are you’ve heard both of these questions at some point in your career. Guess what? In a few months you’ll be hearing a new one (assuming you offer a corporate group health insurance plan).
Section 1512 of the Patient Protection and Affordable Care Act states that employers must provide each new hire and each current employee written notice that includes the following:
1. Information about the exchange, including a description of the services provided by such exchange, and the manner in which the employee may contact the exchange to request assistance.
2. That he/she may be eligible for a premium tax credit or cost-share reduction if the employer’s plan share of the total allowed costs of benefits is less than 60% and the employee purchases coverage through the exchange.
3. That if he/she purchases coverage through the exchange he/she will lose the employer contribution and that all or a portion of such contribution may be excludable from federal taxable income.
Huh? So, benefits and HR professionals are going to be responsible for providing information on a new state-run program that won’t be part of anything they do in their everyday job? The simple answer is yes. So, on March 1, 2013 when you hand an employee the state health insurance exchange guide, get ready for the following questions from employees:
1. What does this mean? (This should prompt some interesting answers given your primary responsibility is to know your employer’s group health plan, not the state exchange plan. I’d suggest responding: “You should call the exchange for more information.”)
2. Is the company’s plan share of the total allowed costs of benefits less than 60%? (Are employees really going to understand what they’re asking? I really hope there is a model communication that makes this question more understandable to employees or allows employers to answer the question in the communication.)
2. a) If the answer is yes, the follow-up will be: “Am I eligible for a premium tax credit or cost-share reduction on the exchange?” (Do we really want to address a tax-based question? Do we even know the answer anyway?)
And, of course, the million dollar question will be: “Should I participate in the company’s health insurance plan or should I enroll in the state exchange?” Activate canned benefits answer #3: “You probably want to contact the state exchange and, based on the information provided, determine which plan makes the best sense for you and your family.”
As much as I want to comment on trying to understand why employers have to provide this communication, I won’t. But I will say I’ve never hoped more for clear regulations and a simple model communication to assist with administering this provision.
Contributing Editor Ed Bray, J.D., is director of employee benefits for a major transportation company in Hawaii.
Have you thought about what to tell employees when they start asking about state-run exchanges? What will you tell them? Share your thoughts in the comments.
