As an Employer, do I need to inform my employees about the Health Benefits Marketplace…even if our company does not offer benefits?
Under the Affordable Care Act, 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:
- The notice must inform each employee of the existence of state or federal health benefits exchanges (Exchanges/Marketplaces).
- 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 (mandated by new law), then the employee may be eligible for a federal premium tax credit (determined by your household income and other criteria) if the employee purchases a qualified health plan through an Exchange/Marketplace.
- 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 (determined by your CPA or tax accountant).
This 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 Fair Labor Standards Act (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:
- institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises;
- schools for children who are mentally or physically disabled or gifted
- preschools, elementary, secondary schools, and institutions of higher education
- federal, state, and local government agencies.
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. 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.