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Affordable Care Act Notice Deadline Approaching

Posted on 9/11/2013 by Lauren Mangnall

Section 18B of the Fair Labor Standards Act (FLSA), as added by section 1512 of the Patient Protection and Affordable Care Act (PPACA), provides that an employer must provide each employee at the time of hiring, or with respect to current employees, not later than October 1, 2013, a written notice. This deadline for current employees is fast approaching.

This obligation covers nearly every employer regardless of size; regardless of whether you provide health insurance to your employee or not; and, regardless if you will be required to or not.
The notice must include:
  • 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;
  • 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
  • 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.
There are model notices provided by the federal government that employers can use, although an employer can choose to do their own. There are model notices for employers who do offer a plan and for employers who do not offer a plan.
The requirement applies to "almost every employer" because the obligation to notify is based on the FLSA definition of employee. 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 notice must be provided in writing in a manner appropriate to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically to those who typically have email access as part of their work situation.
There is no specific penalty for noncompliance. There may be FLSA or PPACA general reporting compliance penalties that apply, though it is not entirely clear which ones might apply. Additional technical information can be found here.