Guidance on the notice to employees of coverage

The Department of Labor's Employee Benefits Security Administration updated its Affordable Care Act web page with the following information on the notice to employees of coverage options:


• Technical Release 2013-02 - Guidance on the notice to employees of coverage options under FLSA §18B and updated model election notice under COBRA, available at http://www.dol.gov/ebsa/newsroom/tr13-02.html 

• Model notice for employers who offer a health plan to some or all employees, available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

• Model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

• COBRA model election notice, available at http://www.dol.gov/ebsa/modelelectionnotice.doc

• COBRA model election notice redline version (to show May 2013 changes), available at http://www.dol.gov/ebsa/modelelectionnoticeredline.doc

IRS Affordability Proposal Excludes Wellness Discount

On May 1st, the IRS released proposed guidance on calculating the affordability of coverage for purposes of PPACA that excludes most wellness discounts from the calculation. The exception is a wellness program that provides a discounted premium for non-tobacco users or for participation in a tobacco cessation program.

To view an article from business insurance below on the proposed guidance click here.

This guidance has been greatly anticipated and most in the industry were surprised that incentives for all types of non-tobacco wellness programs are excluded from this proposed guidance.  There does appear to be a 1-year transitional safe-harbor in the proposed guidance for employers who already had a wellness incentive in place for plan years beginning before January 1, 2015. The below excerpt is copied directly from the Federal Register.

Solely for purposes of applying section 4980H and solely for plan years of an


employer’s group health plan beginning before January 1, 2015, with respect to an

employee described in the next sentence, an employer will not be subject to an

assessable payment under section 4980H(b) with respect to an employee who received

a premium tax credit because the offer of coverage was not affordable or did not satisfy

MV, if the offer of coverage to the employee under the employer’s group health plan

would have been affordable or would have satisfied MV based on the total required

employee premium and cost-sharing for that group health plan that would have applied

to the employee if the employee satisfied the requirements of any wellness program

described in the next sentence, including a wellness program with requirements

unrelated to tobacco use. The rule in the preceding sentence applies only (1) to the

extent of the reward as of [INSERT DATE of PUBLICATION OF THIS DOCUMENT IN

THE FEDERAL REGISTER], expressed as either a dollar amount or a fraction of the

total required employee contribution to the premium (or the employee cost-sharing, as

applicable), (2) under the terms of a wellness program as in effect on [INSERT DATE of

PUBLICATION OF THIS DOCUMENT IN THE FEDERAL REGISTER], and (3) with

respect to an employee who is in a category of employees eligible under the terms of

the wellness program as in effect on [INSERT DATE of PUBLICATION OF THIS

DOCUMENT IN THE FEDERAL REGISTER] (regardless of whether the employee was

hired before or after that date). Any required employee contribution to premium

determined based upon assumed satisfaction of the requirements of a wellness

program available under this transition relief may be applied to the use of an

affordability safe harbor provided in the proposed regulations under section 4980H.

To see the actual guidance via the Federal Register please click here.