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Flood: Employers face new requirements under ACA

Published: Sunday, Sept. 29, 2013 5:30 a.m. CDT

Employers must provide written notice regarding the Affordable Care Act’s new Health Insurance Marketplace by Tuesday.

• Timing and delivery of notice: Employers must provide the notice to current employees no later than Tuesday. The notice may be provided by first-class mail. Alternatively, a notice may be provided electronically if it meets the requirements of EBSA’s electronic disclosure safe harbor (see Labor Reg. 2520.104b-1(c)). New employees must receive the notice at the time of hiring beginning Tuesday. 

For 2014, the Department of Labor will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. Employers must provide a notice to each employee, regardless of plan enrollment status (if applicable), or of part-time or full-time status. Employers do not have to provide a separate notice to dependents or other individuals who are, or may become, eligible for coverage under any available plan, but who are not employees.

• Which employers must provide notices? Notices must be provided by any employers to whom the FLSA applies. Generally, this means an employer who employs one or more employees who are engaged in, or produce goods for, interstate commerce. Most employers will be required to provide the notice because it applies to employers covered by the FLSA. For most firms, a test of not less than $500,000 in annual dollar volume of business also applies. 

The FLSA is enforced by the Department of Labor (DOL), which has guidance relating to the applicability of the FLSA in general including a compliance assistance tool to determine applicability of the FLSA at www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

Because the definition of interstate commerce is broad, we recommend that if you have annual sales of $500,000 or more, that you provide this notice. Examples of covered employees who are engaged in interstate commerce include: an employee such as an office worker who uses a telephone, fax, U.S. mail, or computer email to communicate with persons in another state, an employee who drives or flies to another state while performing his/her job duties, an employee who unloads goods that came from an out-of-state supplier or an employee such as a cashier who uses an electronic device that authorizes a credit card purchase. These are limited examples. Further information on the definition of interstate commerce can be found at the Department of Labor website, www.dol.gov/elaws/esa/flsa/scope/ee2.asp. 

• Form and content of notice: The notice must be provided in writing in a manner calculated to be understood by the average employee. The notice must include information regarding the existence of a new Marketplace, as well as contact information and a description of the services provided by the Marketplace. In addition, the notice must: (1) inform the employee the employee may be eligible for a premium tax credit under Code Sec. 36B if the employee purchases a qualified health plan (QHP) through the Marketplace, and (2) include a statement informing the employee that if the employee purchases a QHP, 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 Department of Labor provides samples of the notices required at www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html and has two model notices to help employers comply. There is the model notice for employers who offer a health plan to some or all employees and the model notice for employers who do not offer a health plan. The model notices are also available in Spanish and MS Word format at http://www.dol.gov/ebsa/healthreform/.

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 Department of Labor.

• Michael J. Flood, CPA, MST, is a partner with Caufield & Flood Certified Public Accountants in Crystal Lake. Reach him at 815-455-9538, michaelf@cfcpas.com, or CFCPAS.com. 

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