Since its adoption in 2009, the Patient Protection and Affordable Care Act (ACA) has received a lot of attention. The ACA is one of the most complex pieces of legislation ever enacted by the federal government, and many of its required regulations are still being written.
Recently, the executive branch announced that it would delay implementation of the so-called “employer mandate”, the requirement that employers with more than 50 full-time employees either offer employer-subsidized health insurance or face penalties. Many employers thought they were “off the hook” for another year. That would be incorrect!
Section 1512 of ACA included a new section 18B of the Fair Labor Standards Act (FLSA). This is a new reporting requirement for every “covered employer” under the FLSA, which impacts most employers in the U.S. As this article is being written, there is just over one month left to comply.
Section 18B of the FLSA requires all employers to provide written notice to each of their employees, no later than October 1, 2013, of certain information related to health insurance benefits. The notice must be furnished to each employee hired after October 1, 2013. The notice is required whether or not the employer provides insurance to any of its employees. The stated purpose of the notice, according to the U.S. Department of Labor (DOL) is:
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.
The notice also provides the mechanism for the IRS to determine whether or not an employer is subject to the penalties prescribed in the ACA.
The notice, which must be in writing, can be delivered by first class mail, in person, or electronically if certain requirements are met. The DOL has issued model language to satisfy this requirement, which is available on the DOL website. Employers are not required to use the model reporting language so long as they include all of the required information.
The DOL has also issued Technical Release No. 2013-02 which describes this reporting requirement in more detail.
Employers who offer insurance have probably received information from their insurance carriers or brokers to complete the notice. If you are an employer who does not offer health insurance, you still have time to comply. We are available to provide assistance to employers who need help satisfying this new requirement.