About the Notice
This communication is specific to the notice requirement of the Affordable Care Act (ACA) and the upcoming October 1, 2013 deadline for employee health care coverage notification. Under the ACA, employers are required to notify their employee base about the options they have for health coverage in the new health care regime. The notice requirement applies to all employers who are subject to the requirements of the Fair Labor Standards Act (generally those employers who employ one or more employees and have at least $500,000 in annual dollar volume of business). Employers must provide the notice to every employee, regardless of whether the employer currently offers health insurance, regardless of the employees enrollment status (i.e., they may have opted out at an earlier date), and regardless of the employees part-time/full-time status.
The notice must cover the following 3 issues:
1. Inform the employee of the State Exchange option, including a description of the services provided by the Exchange and the manner in which the employee may contact the Exchange to request assistance.
2. Inform the employee that if the employer plan fails to provide at least 60% of the costs of benefits, that the employee may be eligible for a premium tax credit under §36B if the employee purchases insurance from the Exchange.
3. Inform the employee that if they purchase health insurance at the Exchange, they may lose their employer contribution to any health benefits plan they may currently have access to and that these contributions are normally excludable from income taxes.
The notice is required to be given to all employees no later than October 1, 2013 or within two weeks of hire if hired after that date.
The Department of Labor (DOL) has provided model notices that contain the appropriate language for the notice to employees. These notices need to be completed with your company details and then distributed to employees no later than the October 1, 2013 deadline noted above. Since many of you will have a payroll between now and the October 1 deadline, we suggest that you provide this notice in their next paycheck distribution.
Click here for a list of form templates
Employers Not Offering Health Care Coverage:
#1 -Employee notice for employers not offering health coverage (English)
#2 – Employee notice for employers not offering health coverage (Spanish)
- We believe that if you provide the English version, you have complied. If you are concerned about employees that are not able to read English, you can add a line to the form that indicates a Spanish version of the document is available upon request. Spanish Disclosure: Una versión en español de este formulario está disponible bajo petición.
- Part B needs to be completed with your company information. We have had some questions regarding providing the Employer EIN and understand your concerns for safety. In this case, we feel that this section should be completed with your full EIN. The number already appears on the Form W-2 you present to each employee, and most EIN’s are available online.
- This form should be used if you have no health insurance coverage you provide through your business. Keep in mind that if the business is paying for or reimbursing an employee for a privately owned health insurance premium, then this form is still appropriate. Unless the policy is in the name of the business entity, we believe that it is appropriate to use this form.
Employers Offering Health Care Coverage
#3 -Employee notice for employers offering health coverage (English)
#4 – Employee notice for employers offering health coverage (Spanish)
- We believe that if you provide the English version, you will have complied. If you are concerned for those employees who you are not sure are able to read English, you can add a line to the form that indicates that a Spanish version of the document is available upon request. Spanish Disclosure: Una versión en español de este formulario está disponible bajo petición.
- Page 1 requests a business contact that can provide additional information on the insurance plan you carry for your employees if necessary.
- Page 2, part B, needs completed in detail. See the comment on the EIN disclosure above.
- Page 2, basic information about health coverage; be careful in this section. Be as specific as you can be as to who your eligible employees are. For example, if you provide insurance to all employees who work 30 hours, but you only pay for ½ of the premium for the employee and they pay the other half plus they are responsible for their spouse or other family members on the plan, then you would provide that detail as follows:
Example
a) Eligible employees are: Those employees working 30 hours per week. The company pays 50% of the premium for the employee and the employee is responsible for the other 50 % of the premium.
b) Conversely – If you provide only to management level employees, your plan may say “eligible employees are those non seasonal full time management level employees – the company pays 100% of the premium for these employees”
c) Eligible dependents are: The spouse and children of the employee (up to 26 years of age). The company pays 0% of the premium for the spouse and children. The employee is responsible for 100% of the premium.
- Page 2, DO NOT check the box that the coverage meets the minimum value standard. Unless you have an actuarial report provided to you by your insurance provider, leave this box blank.
- Page 3, questions 13 – 16 – these questions are optional and we do not necessarily recommend that you answer these questions.
Cobra Continuation Election
COBRA continuation election form with added verbiage on option to explore the State Exchange (English) – #5
COBRA continuation election form with added verbiage on option to explore the State Exchange (Spanish) – #6
The COBRA forms are available for people who are going onto COBRA coverage in the near term. The election form has language that the State Exchange is a place for them to explore. We believe that the COBRA continuation election forms should be used for any former employees that are utilizing the COBRA coverage of your policy. They may find that they can purchase more affordable insurance on the exchange and replace COBRA with this more affordable coverage.
Other Important Documents
#7 – DOL Technical Release and Background on the employee notice requirement. Section 7 is a technical release and provides additional information and background for you as the employer. We do not recommend that it be provided to the employees.
#8 – DOL Website FAQ stating that not providing notice to employees will not result in penalty or fine. The DOL FAQ is a statement explains that not providing notice to all employees will not result in fines or penalties, however we do not take much comfort in this statement. The IRS will be administering this, not the DOL and we are not convinced that the IRS will be as lenient as the DOL appears to be. Our recommendation is to comply with the law and provide this information to your employees as soon as possible, preferably by or before the October 1, 2013 deadline.
These forms should be filled out by the employer and disseminated to employees. They are United States DOL provided forms and as such have no copyright issues with them and are encouraged to be used. They are WORD documents, enabling you to modify your answers as noted above. If modified, the three requirements above must still be complied with. Mail, electronic notification, or physical handling of the notice directly to the employee are all acceptable forms of notification delivery.
Documentation and Verification of Employee Acknowledgment
The employer should have some method to document that the notice was provided to all employees. We recommend at a minimum that a log be maintained where each employee acknowledges receipt of the information provided to them. Additionally, when a new employee is hired, acknowledgement of disclosure should also be documented. For your convenience, we’ve place sample acknowledgement forms in our template guide.
The federal website for the exchange information, as seen on the employee notices is www.healthcare.gov.
The Idaho exchange website is www.yourhealthidaho.org.
The Oregon exchange website is www.coveroregon.com.
Please contact our office with questions or assistance.
The NICHOLS Accounting Group, P.C.