Question: What are the required annual employer notices to employees related to health and welfare plans?
Short Answer: Employers must provide the Medicare Part D Creditable Coverage, CHIP, and WHCRA notices annually. Typically, employers will time the distribution of all the required notices to meet the October 15 Medicare Part D Creditable Coverage notice deadline. Employers should also consider providing additional notices with the required notices.
The July 31 semi-annual release of the updated DOL Children’s Health Insurance Program (CHIP) Model Notice for Employers Regarding Premium Assistance Opportunities marks the unofficial start to the health and welfare plan annual notice season.
The following overview addresses the employer responsibilities to provide such annual notices to employees:
The Required Annual Notices:
1. Medicare Part D Notice of Creditable (or Non-Creditable) Coverage
2. Children’s Health Insurance Program (CHIP) Notice
3. Women’s Health and Cancer Rights Act (WHCRA) Notice
The Recommended Annual Notices:
1. HIPAA Special Enrollment Notice
2. Primary Care Provider Designation Patient Protection Notice
3. ADA Wellness Program Notice
Examples of Employer Notices Typically Not Provided Annually:
1. Newborns’ and Mothers’ Health Protection Act (NMHPA) Notice
2. ACA Exchange Notice
3. HIPAA Notice of Privacy Practices
Required Annual Notice #1: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage
- When: Annually by October 15.
- Why: To inform employees whether their employer-sponsored group health plan’s prescription drug coverage is at least as rich as a Medicare Part D plan.
- To Whom: All Part D eligible individuals who are enrolled or seeking to enroll in the employer’s plan that provides prescription drug coverage. This includes all individuals enrolled in Part A or Part B who live in the service area of a Part D plan. (Best Practice: Provide the notice to all employees because employers will not know which employees, spouses, or dependents are enrolled in Part A or Part B, and they will not know which individuals are seeking to enroll in the employer’s plan).
- How: Paper delivery by hand, first class mail, or electronic delivery for participants who “have access to the plan sponsor’s electronic information system on a daily basis as part of their work duties.” This electronic delivery standard generally follows the ERISA electronic disclosure safe harbor.
- Penalties: No specific employer penalty, but employees must have the information to avoid potential Part D late enrollment penalties (the premium may go up by at least 1% of the Medicare based beneficiary premium for every month without creditable coverage).
- Combining with Other Materials: Permitted as long as the notice is “prominent and conspicuous.” If not on the first page, the first page should include a separate box that is bolded or offset on the first page and prominently references the notice in at least 14-point font. (Model Language: “If you (and/or your dependents) have Medicare or will become eligible for Medicare in the next 12 months, a Federal law gives you more choices about your prescription drug coverage. Please see page xx for more details.”)
- Model Notice: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage (last updated in 2011)
Required Annual Notice #2: Children’s Health Insurance Program (CHIP) Notice
- When: Annually. (Best Practice: Although there is no specific timeframe for this annual notice, we recommend providing it with the other required annual notices.)
- Why: To inform employees that they may be eligible for premium assistance from through CHIP or Medicaid state programs.
- To Whom: All employees, regardless of enrollment status, residing in states providing CHIP/Medicaid premium assistance. (Best Practice: Provide the notice to all employees to avoid tracking each employee’s state premium assistance programs.)
- How: Paper delivery by hand, first class mail, or electronic delivery where the ERISA electronic disclosure safe harbor is satisfied.
- Penalties: Currently at $127/day/employee based on the 2022 indexed penalty amounts.
- Combining with Other Materials: Permitted as long as the notice “appears separately and in a manner which ensures that an employee who may be eligible for premium assistance could reasonably be expected to appreciate its significance.”
- Model Notice: Children’s Health Insurance Program (CHIP) Notice (Updated semi-annually each January 31 and July 31)
Required Annual Notice #3: Women’s Health and Cancer Rights Act (WHCRA) Notice
- When: Upon enrollment and annually. (Best Practice: Although there is no specific timeframe for this annual notice, we recommend providing it with the other required annual notices.)
- Why: To inform employees of the availability of coverage under the health plan for reconstructive surgery and other related items and procedures following a mastectomy.
- To Whom: All participants and beneficiaries under the health plan. A separate notice must be furnished to a beneficiary (i.e., a spouse, domestic partner, or dependent) where the individual’s last known address is different than the last known address of the covered participant.
- How: Paper delivery by hand, first class mail, or electronic delivery through the ERISA electronic disclosure rules.
- Penalties: $100/day/employee under §4980D; potential employee ERISA breach of fiduciary duty claim.
- Combining with Other Materials: Permitted.
- Model Notice: Women’s Health and Cancer Rights Act (WHCRA) Notice (Pages 141-142)
Recommended Annual Notice #1: HIPAA Special Enrollment Notice
Employers are required to provide the HIPAA special enrollment notice at or before the time an employee is initially offered the opportunity to enroll in the health plan. There is no requirement to distribute the notice annually.
Best Practice: Although there is no requirement to re-distribute the notice annually, we recommend providing it at the same time as the other required annual notices because of the importance of the special enrollment rights.
For more information on HIPAA special enrollment rights, see:
Model Notice: HIPAA Special Enrollment Notice (Page 138)
Recommended Annual Notice #2: Primary Care Provider Designation Patient Protection Notice
Employers sponsoring a health plan with options that require designation of a primary care provider (e.g., HMOs) must provide the patient protection notice to plan participants whenever an SPD or other similar description of benefits is provided. There is no requirement to distribute the notice annually.
Best Practice: Although there is no requirement to re-distribute the notice annually, we recommend providing it at the same time as the other required annual notices because the DOL asks for evidence the employer provided it to participants in its standard list of documents to be produced in an investigation/audit context. The notice should also be included in the SPD.
Prior to 2022, this notice was not required for plans maintaining ACA grandfathered plan status. Effective as of the first plan year beginning on or after January 1, 2022, the CAA has extended this notice requirement to also include grandfathered plans. Accordingly, both non-grandfathered and grandfathered plans are now subject to the primary care provider designation patient protection notice.
For more information on the significantly expanded ACA protections under the CAA, see:
Model Notice: Primary Care Provider Designation Patient Protection Notice
Recommended Annual Notice #3: ADA Wellness Program Notice
Employers sponsoring a wellness program that includes medical examinations (e.g., biometric screenings) or disability-related inquiries (e.g., medical questionnaires) must provide an ADA notice addressing how the employer will protect and use information related to the program. There is no explicit requirement in the EEOC guidance to distribute the notice annually.
The EEOC ADA FAQ guidance provides that there is no requirement that employees receive the notice at a particular time. However, it also states that employees should receive the notice before providing any health information, and with enough time to decide whether to participate in the program.
Best Practice: Although there is no requirement to re-distribute the notice annually, we recommend providing it at the same time as the other required annual notices to avoid employees claiming that they were not adequately informed of their ADA rights with respect to the wellness program.
Note that a federal court in 2016 ruled that components of the EEOC wellness program rules do not meet the requirements of the ADA, and the EEOC has accordingly formally removed those aspects of the regulations.
Although the notice component was not removed, the EEOC issued new proposed ADA wellness regulations in January 2021 at the very end of the Trump administration that would have eliminated the notice requirement. However, the Biden administration removed those proposed regulations shortly thereafter pursuant to a regulatory freeze memo issued on his date of inauguration.
As a result of this chaotic regulatory landscape, it is not clear whether the EEOC is currently enforcing the notice requirement. We feel that the best practice approach is to continue following the EEOC regulations’ notice requirement until we have new guidance specifying the ADA requirements moving forward.
Model Notice: ADA Wellness Program Notice
Other Non-Annual Notice #1: Newborns’ and Mothers’ Health Protection Act (NMHPA) Notice
The NMHPA requires employers to include in the health plan SPD a statement describing the plan’s required minimum hospital length of coverage in connection with childbirth for the mother and newborn child.
The NMHPA notice is not an annual notice requirement. It is typically not included with the employer’s annual legal notices described above. DOL guidance confirms that including the NMHPA notice in the SPD is sufficient.
Other Non-Annual Notice #2: ACA Exchange Notice
The ACA requires employers subject to the Fair Labor Standards Act (FLSA) to provide the Exchange notice to new hires within 14 days of the employee’s start date. The notice informs employees of how to access alternative individual policy coverage through the Exchange.
The Exchange Notice is not an annual notice requirement. It is typically not included with the employer’s annual legal notices described above. Best practice is to include the Exchange Notice as part of the standard new hire materials.
Note: The Exchange Notice is also frequently referred to as the “Marketplace Notice” or the “Notice of Coverage Options”. These names are all referring to the same notice requirement added by the ACA.
Other Non-Annual Notice #3: HIPAA Notice of Privacy Practices
Employers with a self-insured health plan must provide employees with a HIPAA Notice of Privacy Practices describing the plan’s use and disclosure of PHI upon enrollment and within 60 days of a material change to the notice.
The HIPAA Notice of Privacy Practices is not an annual notice requirement. It is typically not included with the employer’s annual legal notices described above.
HIPAA does require employers with a self-insured health plan to inform employees of the availability of the Notice of Privacy Practices at least once every three years. Employers with a self-insured health plan may choose to include this Notice of the Availability of the Notice of Privacy Practices with the annual legal notices every third year, or more frequently on a voluntary basis if so desired.
Sample language for the Notice of the Availability of the Notice of Practice Practices:
“The [Enter Plan Name]’s use and disclosure of protected health information (PHI) under its self-insured health plan options is described by a HIPAA Notice of Privacy Practices maintained by [Enter Employer Name]. One of our responsibilities under HIPAA is to periodically remind you of the availability of this Notice of Privacy Practices should you want more information about the Plan’s procedures to protect and secure the confidentiality of your PHI. You may access the Plan’s HIPAA Notice of Privacy Practices by [Enter Method of Accessing Notice]. Please contact the HR Department if you have any questions about this Notice.”
For more information on the HIPAA Notice of Privacy Practices, see:
Reminder: New Transparency in Coverage Machine-Readable Files Posting Required
As of July 1, 2022, employers sponsoring a self-insured medical plan must make available new transparency in coverage information on a publicly accessible website for the group health plan. The new required content includes machine-readable files that disclose negotiated rates for covered items and services between the plan and in-network providers, and historical allowed amounts and billed charges for covered items and services provided by out-of-network providers.
CMS recently posted additional “Technical Clarifications” guidance that confirms employers without a public website for the group health plan may satisfy these requirements by entering into a written agreement with the TPA to post the files on the TPA’s public website on behalf of the plan.
Note: This TiC machine-readable files posting requirement is not an annual notice requirement.
For more information on the Transparency in Coverage Machine-Readable Files posting, see:
Links to Required and Recommended Annual Notices
Many employers prefer to provide employees with online access to the annual notice materials.
Here is a sample message that employers can use to distribute annual notices electronically:
2023 Health Plan Annual Notices
The Company is required by applicable law to provide you with certain notices each year that inform you of your rights and our responsibilities with respect to the Company’s health plan (the “Plan”).
Please carefully review the information contained below and share it with your covered dependents. We suggest you keep this information with your Summary Plan Description (“SPD”) for future reference.
[Company’s Plan Provides Part D Creditable Coverage]
[Company’s Plan DOES NOT Provide Part D Creditable Coverage]
The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.