As you are probably aware, new provisions of the Affordable Care Act (also known as Obamacare) go into effect January 1, 2014.   Individuals and employees of small businesses will have access to coverage through a new competitive private health insurance market – the Health Insurance Marketplace. The Marketplace offers “one-stop shopping” to find and compare private health insurance options. Open enrollment for health insurance coverage through the Marketplace begins October 1, 2013.  (Although the federal government has extended the mandatory reporting by employers (and potential penalties for not offering coverage), states have the option of requiring participation, and CA is requiring notification of the CA exchange).

An employer must provide each employee a written notice:

1. Informing the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
2. If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through the Marketplace; and
3. 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.

The requirement to provide a notice to employees of coverage options applies to employers to which the FLSA (Fair Labor Standards Act) applies. In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies.  The FLSA also specifically covers the following entities: hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies.  For more information on the FSLA, see http://www.dol.gov/compliance/guide/minwage.htm.

The Department of Labor has provided two models that can be used to distribute information to employees.  If you currently offer healthcare to your employees, use the model found at http://templatelab.com/FLSA-with-plans/.  If you do not offer coverage, use the model located at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf.

This is a very confusing topic for employers in terms of who is subject, required implementation, etc.  If you feel overwhelmed with this area, feel free to contact my office and we will give a referral to a company we recommend that is well versed on the topic and can assist you.

Candy