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Covered California: A New Health Insurance Exchange

Covered California, the new marketplace health insurance exchange for California created as a result of the Affordable Care Act (ACA), goes into effect January 2014. By October 1, 2013, all California employers with $500,000 or more in annual sales are required under the ACA to provide employees with an “Exchange Notice” detailing provisions of Covered California.  The notice must be given to every employee, full or part-time, regardless of health plan coverage status, and must include written notice of the following:

  • Covered California’s (California’s health insurance exchange) basic information, a description of services and contact information.
  • If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of costs, the employee may be eligible for a tax credit.
  • If the employee purchases a qualified health plan through the marketplace, the employee may lose the employer contribution to any health benefits plan offered by the employer, and all or a portion of the employer contribution may have been excludable from federal income tax.

The Department of Labor has provided two models of such a notice: one for employers that do not offer a health plan and another for employers that offer health benefits. Employers may use one of these models, as applicable, or a customized version. Both forms require employer identifying and contact information. The form for employers with group health insurance coverage also requires:

  • Information on to whom health coverage is offered and the eligibility requirement, and whether dependents may obtain coverage and the rules for their eligibility;
  • A checkbox to indicate whether the coverage is affordable and meets the minimum value standard (under the affordable coverage requirement, the employee’s share of the premium may not exceed 9.5% of annual household income, and to meet minimum value requirements, the plan’s share of the cost of coverage must be at least 60%);
  • The name and contact information for someone with more information about employer-sponsored coverage, which may include a human resources contact or even a broker or third party administrator.

Michelman & Robinson has developed a team of attorneys to respond to ACA questions. If you have any questions regarding the requirements of the ACA, please do not hesitate to contact us.

This blog is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.