Providing Notice to Employees – Minimum Actuarial Value (MAV)
In October, groups will have to share two very important pieces of information with their employees, including:
1. Information on the marketplace and the minimum actuarial value of their health plan. This notice must be sent to all new employees at the time of hiring.
Information about the notice
The Affordable Care Act requires employers to provide notice to new employees at the time of hiring.. In this notice, an employer must tell the employee about the health insurance marketplace and if the employee's health plan meets the minimum actuarial value (MAV). An employer-sponsored health plan meets the MAV if the plan's share of the total allowed costs covered by the plan is no less than 60 percent (Section 36B(c)(2)(ii) of the Internal Revenue Code of 1986).
A sample notice that can be found at www.dol.gov/ebsa/healthreform/index.html. The sample notices are found under the topic "notice to employees of coverage options".
All current medical plans under 100 meet MAV.
2. Information on the Medicare Modernization Act. This notice must be sent no later than Oct. 15, 2014. This notice should go to all employees that are currently enrolled or intend to enroll in the medicare pharmacy plan. If you are not sure which employees and dependents have Medicare, a notice should be sent to all employees.
Information about the notice
To be compliant with the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Medicare Modernization Act (MMA)), most employers and unions that provide employees with Medicare prescription drug coverage through an employer-sponsored health plan must tell individuals if their pharmacy benefits are considered creditable prescription drug coverage as defined in the Medicare Modernization Act.
A sample notice is at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Model-Notice-Letters.html.
Visit the CMS website to access these requirements at
Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.
A. Form and Content of the Notice
Pursuant to the statute, the notice to inform employees of coverage options must include information regarding the existence of a new Marketplace as well as contact information and description of the services provided by a Marketplace. The notice must also inform the employee that the employee may be eligible for a premium tax credit under section 36B of the Code if the employee purchases a qualified health plan through the Marketplace; and a statement informing the employee that if the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
B. Timing and Delivery of Notice
Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.
With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.
The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.
C. Model Notice
To satisfy the content requirements for FLSA section 18B, model language is available on the Department’s website www.dol.gov/ebsa/healthreform. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan or some or all employees. Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.