Many employers are facing a healthcare deadline that imposes a major paperwork burden but, "no fine" was reported recently. Under the Affordable Care Act, most employers are required to provide a notice to each employee by October 1, 2013 explaining their insurance marketplace options available under the law.
Misinformation has been circulating since the White House and Department of Labor (DOL) declined to comment when asked how the fine would be implemented, and deferred to the U.S. Small Business Administration on Sept. 6th at a press conference. The SBA then did not clarify but commented that education on this Fair Labor Standards Act (FLSA) requirement has been included in “any and all outreach that SBA does with small business owners.” The agency says it has participated in more than 750 Affordable Care Act’s (called “ACA 101”) related events with more than 30,000 small business owners and community stakeholders since February 2013.
Three days later, on Sept 9th Fox Business News reported: “any business with at least one employee and $500,000 in annual revenue must notify all employees by letter about the Affordable Care Act’s health-care exchanges, or face up to a $100-per-day fine. The requirement applies to any business regulated under the Fair Labor Standards Act, regardless of size.”
Three days later on Sept. 12, the SBA posted on their blog that “there is no fine or penalty under the law for failing to provide the notice.” But also stated the letter deadline stands, meaning if “your company is covered by the Fair Labor Standards Act, you must provide a written notice to your employees about the Health Insurance Marketplace by October 1, 2013.”
According to the Department of Labor, "the notice must be provided in writing in a manner calculated to be understood by the average employee." It can be provided by first-class mail or electronically if the certain requirements are met.
The written notice must:
- Inform employees of the existence of the "Health Insurance Marketplace," and include a description of the services it provides and how employees can 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, inform the employee that he or she may be eligible for a premium federal tax credit if the employee purchases a qualified health plan through the Marketplace.
- Inform the employee that if he or she purchases a qualified health plan through the Marketplace, he or she may lose the employer contribution (if any) to any health benefits plan offered by the employer. In addition, all or a portion of such contribution may be excludable from income for Federal income tax purposes.
The DOL has provided model notices that employers can fill out. They can be accessed by clicking here (for employers with plans) and here (for employers without plans).
The DOL stated on its website that an employer can satisfy its obligation to provide notices if another party, such as a third-party administrator or multi-employer plan, sends out notices on its behalf.
The new responsibility must be met by employers that must comply with the Fair Labor Standards Act (FLSA). 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: 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; as well as federal, state and local government agencies.
As a business owner, it's important to understand how the Affordable Care Act may affect your business. For more information on the SBA ongoing blog series, "Myth vs. Fact: The Affordable Care Act and Small Business," or to sign up for their newsletter, go to https://www.sba.gov/community/blogs/community-blogs/health-care-business-pulse/