Many of our clients are raising questions about the Affordable Care Act (“ACA”). Some of our clients incorrectly believe that if they have less than 50 full-time employees, they have no obligations under the ACA.
Although the requirement for businesses with more than 50 full-time equivalent employees (30 or more hours) to provide affordable health insurance has been extended to January 1, 2015, under the ACA all employers covered by the FLSA (usually those who have at least one employee and at least $500k in annual dollar volume of business) must provide the following notices to all of their employees no later than October 1, 2013:
- Notification about the new Health Insurance Marketplace (“Marketplace”); and
- Notification that employees may be eligible for a premium tax credit if they purchase coverage through the Marketplace and that if the employee purchases a plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer.
You should also be aware that after October 1, 2013, all new employees must be provided with such information.
The Department of Labor (“DOL”) has created form notices which can be modified and used; one for employers who do not offer a plan and one for employers who do offer a plan. Here are links to the DOL forms:
In addition to the required notices, you should also be aware of some other changes that take place in 2013 due to the ACA:
- Flexible Savings Accounts are limited to $2,500 per year.
- There is an increase in Medicare withholdings of .9% for employees with income over $200k for single filers and $250k for joint filers. The increase applies only to wages in excess of the thresholds and the employer portion remains unchanged.
- A 3.8% tax will be assessed on net investment income for taxpayers with Modified Adjusted Gross Income over $200k for single filers and $250k for joint filers.
- The cost of employer-provided medical coverage is to be included on Form W-2. For now, this reporting requirement does not apply to employers who filed fewer than 250 W-2s in the prior year.
- There is a 90-day maximum waiting period rule for providing health insurance.
Please note we are only providing you with a summary of some of the provisions and requirements of the ACA for 2013. If you have any questions or are unsure if the requirements pertain to you, or if you want more information on the changes that will take place in the coming years, please feel free to contact your accountant or health insurance agent.
You should be aware that the Affordable Health Care Act and its requirements are complex and regulations are not fully developed at this time. Additionally, many of the provisions of the Act, such as if you would have a penalty and if so, what it would be, are fact specific and thus would depend upon your exact situation.
FAQ on Notice of Coverage Options
Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace?
A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.
The notice should inform employees:
- About the Health Insurance Marketplace;
- That, depending on their income and what coverage may be offered by the employer, they may be able to get lower cost private insurance in the Marketplace; and
- That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits
The U.S. Department of Labor has two model notices to help employers comply. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan to some or all employees:
- Model Notice for employers who offer a health plan to some or all employees
- Model Notice for employers who do not offer a health plan
- The model notices are also available in Spanish and MS Word format here.
Employers may use one of these models, as applicable, or a modified version. More compliance assistance information is available in a Technical Release issued by the US Department of Labor.
