Affordable Care Update – Notice to Employers

1 Oct 2013 by STWAdmin, No Comments »

By: Pugh CPAs

As the various effective dates for the Patient Protection and Affordable Care Act (ACA), commonly referred to as Obamacare, are approaching, we are attempting  to inform our clients about the new law, its effects on employers, and actions they need to take. Presently, many aspects of the Act   need clarification from the regulatory authorities, especially administrative issues. Nevertheless, most employers will be required to send a notice to their employees regarding the existence of the “Marketplace” (the Exchanges) and its features by October 1 of this year. Moreover, please note that although a portion of the Obamacare mandate has been delayed until 2015, the deadline of Tuesday, October 1, 2013 to notify employees about the Marketplace has not been delayed.

The Patient Protection and Affordable Care Act (ACA) requires employers subject to the Fair Labor Standards Act (FLSA) to provide a written notice to employees about the new health insurance exchange by Tuesday, October 1, 2013. The FLSA applies to governmental, not-for-profit and for-profit entities as described in Technical Release 2013-02. There is a link under section III (A) of this webpage to assist taxpayers determine the applicability of the FLSA. The notice must also be provided to employees hired after Oct. 1, 2013, within 14 days of their start date. Employers must provide the notice to all employees regardless of their status as part-time or full-time or whether they are eligible to enroll in an employer-sponsored health plan. Employers are not required to provide a separate notice to spouses or dependents of employees.

The notices must be sent to employees via first class mail or approved electronic delivery. The notice cannot be handed out at a staff meeting or similar company-wide gathering or be emailed unless each employee has a specific business email address and a dedicated computer at the office that is not shared. Merely posting a notice on the employer’s website will not, by itself, be sufficient to satisfy the notice requirement. Employers also need to provide a written or electronic notification to employees directing them to the website and describing the significance of the health insurance exchange notice. In addition, employees must be advised of their right to request a paper version of the exchange notice.

The exchange notice must be written in a manner that will be understood by an average employee and must advise employees of the following:

  • The existence of the exchange (also known as a marketplace), including a description of services provided and information on how employees can contact the exchange for      assistance
  • Employees may be eligible for a premium tax credit if they purchase health insurance through the exchange and if the employer’s health plan (if any) fails to meet certain standards
  • Employees will lose the employer’s contribution (if any) to any health plan the employer offers, including the tax-favored treatment of such contribution (e.g., that it may be excluded from federal income tax), if the employees purchase health insurance through the exchange

The Department of Labor (DOL) has provided two model notices, one for employers that do not currently offer any health plan options and another for employers that currently offer a health plan to some or all employees. The DOL has indicated that employers are not required to use these models and thus can modify any part of them, provided the exchange notice meets the content requirements described above.

Because Part A of the DOL model notices contains standard information designed to meet the content requirements, it is anticipated that most employers will use Part A of the model notices. Part B contains specific information about the employer and its health plans (if any). Therefore, employers will need to decide if they want to include any of the Part B information in their exchange notice.

With regard to the minimum value and affordability standards, an employer’s health plan meets the minimum value standard if the plan’s share of the total allowed benefit costs covered by the plan is at least 60 percent of such costs. A plan meets the affordability standard if an employee’s cost for self-only coverage does not exceed 9.5 percent of the employee’s household income. Employers may use the employee’s rate of pay or W-2, Box 1 wages as a safe harbor for household income. Employees who are offered health plan coverage by their employer that meets the minimum value and affordability standards are not eligible for premium tax credits on health insurance coverage they purchase on the exchange.

The Department of Labor has indicated there is currently no penalty for failing to provide this notice. However, if you are subject to the FLSA (1) we recommend printing out the forms from the links above and mailing them to your existing employees’ home address of record on or before October 1, 2013 and to any new employees within the first 14 days of employment. See discussion above for possible electronic delivery methods.

If you have any questions or concerns, please contact us at 931-528-6865.

Thank you for the opportunity to serve you.

(1) Most employers with at least one employee and $500,000 in annual gross receipts will be subject and some will be subject even if they do not meet the gross receipts testWe hope you enjoyed hearing our perspective and we thank you for your continued support.  Feel free to call with any questions or concerns.

If you would like to receive other updates from us or would like information about our services, please email us at or call (931) 528-6865.  We look forward to continuing to serve you.

Past performance is not a guarantee of future results. This material is meant for general illustration and/or informational purposes only. The views expressed are not necessarily the opinion of FSC Securities Corporation, Inc. This material should not be relied upon as investment advice. Investors should note that there are risks inherent in all investments, such as fluctuations in investment principal.  Past performance of any index, investment or strategy cannot be relied upon as a guarantee of future results. This article contains forward looking statements and projections.  There are no guarantees that these results will be achieved.   No investment strategy can guarantee a profit or protect against loss in periods of declining values. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment.  Sector investing may involve a greater degree of risk than investments with broader diversification and may limit your investing options.  They value of equity securities may fluctuate in response to specific situations for each company, industry, market conditions and general economic environments.  Technology and Internet-related stocks, especially of smaller, less seasoned companies, tend to be more volatile than the overall market.

Advisory services offered through Cravens & Company Advisors, LLC, a Registered Investment Advisory Company.  Securities offered through, and advisory services may also be offered through, FSC Securities Corporation, an Independent Registered Broker/Dealer, Member FINRA/SIPC, and a Registered Investment Advisor.  Not affiliated with Cravens & Company Advisors, LLC. 

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