Under the PPACA, employers must provide each employee, regardless of plan enrollment status or whether the employee is part-time or full-time, with a written notice informing the employee of three things.
- First, the notice must inform each employee of the existence of state or federal health benefits exchanges (Exchanges/Marketplaces).
- Second, the notice must inform each employee that if the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent, then the employee may be eligible for a federal premium tax credit if the employee purchases a qualified health plan through an Exchange/Marketplace.
- Lastly, the notice must include a statement informing the employee that if he or she purchases a qualified health plan through an Exchange/Marketplace, then the employee may lose the employer contribution 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.
FLSA Notice Requirements
On May 8, 2013, the Department of Labor released Technical Release 2013-02, providing guidance on notices to employees of coverage options, as well as a model notice for employers. The guidance clarifies that the requirement to provide a notice to employees of coverage options applies to employers that are subject to the Fair Labor Standards Act (FLSA).
PPACA’s Section 1512 creates a new requirement under the FSLA (referred to as §18B), which requires employers to give a notice to employees of coverage options available through an Exchange/Marketplace. Generally, 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. In other words, the FLSA generally does not cover businesses with less than $500,000 in annual dollar volume of business.
However, the FLSA covers the following entities regardless of business volume: (1) hospitals; (2) institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; (3) schools for children who are mentally or physically disabled or gifted; (4) preschools, elementary, and secondary schools, and institutions of higher education; and (5) federal, state, and local government agencies.
There is an online tool for employers to determine whether they are subject to the FLSA.
Beginning October 1, 2013, employers are required to provide the notice to each new employee at the time of hiring of their coverage options. For 2014, as long as the notice is provided within 14 days of an employee’s start date, it will be deemed to have been provided at the time of hiring. For current employees before October 1, 2013, employers must provide the notice by October 1, 2013.
The notice must be written in such a way as to be understood by the average employee and may be provided via first-class mail or electronically. With Technical Release 2013-02, the Department of Labor provided two model notices that satisfy the content requirements – one for employers that do not offer a health plan and one for employers that offer a health plan to some or all employees. Employers may modify the model language as long as it still meets the content requirements described above.
How Shirazi Benefits Will Help
In order to help our clients comply with the October 1, 2013 deadline, we will be providing you with a completed minimum value assessment, using the approved MV Calculator from the Centers for Medicare & Medicaid Services. An employer-sponsored health plan meets the “minimum value standard” if the plan’s share of the total allowed benefits costs covered by the plan is no less than 60 percent of such costs (Section 36B(c)(C)(ii) of the Internal Revenue Code of 1986).
Along with the completed MV calculation, Shirazi Benefits will also be providing our clients with instructions on completing the notice. Our office will have this information out to all our clients before the October 1, 2013 deadline in order to provide you with ample enough time to send out the notice to your employees.