The Affordable Care Act (ACA) amended the Fair Labor Standards Act (FLSA) to require employers to provide notice to new hires about coverage options available on the state and federal exchanges/marketplaces. The DOL has changed its terminology over time, but it is currently referred to as the notice of coverage options.

Unlike ERISA, the FLSA applies directly to employers (rather than indirectly by application to the plans employers sponsor). The FLSA has very few exemptions, and those that it does have are extremely narrow. Importantly, there is no small employer exception, and it applies to governments, churches and private sector employers alike.

Employees must be told of the availability of a state and/or federal health insurance exchange, including a description of the services provided by the exchange and information on how to contact the exchange to request assistance. Employees must be informed that they may be eligible for a subsidy (a premium tax credit or cost-sharing reduction or both) on the exchange if the employer's share of the total cost of benefits under the employer-sponsored plan is less than 60%. Employees must also be informed that they will lose employer contributions toward health insurance if they purchase a health plan through the exchange and that all or a portion of employer contributions to employer-sponsored coverage may be excludable for federal income tax purposes.

The DOL has produced model notices, available on this DOL webpage.

The notice of exchange availability (a/k/a notice of coverage options) must be given to all new hires within 14 days of hire. This applies not only to benefits-eligible employees but also to non-benefits-eligible employees, including part-time employees, student interns, temporary employees, etc.

The notice of exchange availability must be provided by mail, in person or electronically in accordance with the DOL electronic delivery safe harbor.