Labor Announces No Penalty For Failure to Provide Exchange Notice

In a very brief Frequently Asked Question (FAQ) document issued on September 11, the U.S. Department of Labor formally clarified that an employer will not be subject to a fine or penalty under the ACA if it fails to provide a written notice to its employees about the health insurance exchange in their state by October 1, 2013. The ACA amended the Fair Labor Standards Act to require employers (all employers, not just those who currently provide health coverage) to provide each employee with a written notice containing information about the exchange and how to request assistance, describing the availability of a premium tax credit (if applicable) and implications for the employee if they choose to purchase a qualified health plan through an exchange. The FAQ guidance, however, makes clear that the requirement is not enforceable through a penalty or fine, although it suggests that employers “should” provide the written notice. By not providing this document, an employer runs a higher risk of being assessed a shared responsibility payment, because employees will not fully understand the implications of seeking a tax credit on an exchange.