New provisions of the Affordable Care Act go into effect January 1, 2014. Individuals will have access to coverage through a health insurance marketplace offering “one-stop shopping” to find and compare 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, many states are requiring participation beginning in January.
An employer must provide each employee a written notice:
- Informing the employee of the existence of the Marketplace including a description of the services provided, and the manner in which the employee may contact the Marketplace to request assistance;
- 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 if the employee purchases a qualified health plan through the Marketplace; and
- 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. 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://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf. If you do not offer coverage, use the model located at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf.
If you feel overwhelmed with this area, contact your insurance agent who can walk you through what you need to do to be compliant.