Although several provisions of the Affordable Care Act (ACA) have been in effect since 2010, the majority of the regulations that affect employers will take effect in the fall of 2013 and 2014. One new requirement that may have slipped past you and where the clock is quickly ticking down in order to comply is Section 1512. This requirement applies whether your business is large or small, already provides health benefits to employees or not, or falls under the employer mandate or not.
The ACA, per section 1512, amended the Fair Labor Standards Act (FLSA) requiring employers to provide a written notice describing certain elements of the Health Insurance Exchange and subsidy eligibility to all current and future employees, and do so no later than October 1, 2013 (a date moved back from the original of March 1, 2013). The deadline is intended to correspond to the open enrollment period beginning October 1 for coverage through the marketplace beginning January 1, 2014.
Technically, the notice requirement applies only to employers subject to the FLSA—those engaging in, or producing goods for, interstate commerce and whose annual sales total $500,000 or more. However, that is a very large category that is essentially most private-sector employers and certain governmental entities, such as schools, hospitals, nursing homes, institutions of higher learning and federal, state and local government agencies. Additionally, because this requirement also falls under the Labor Management Relations Act, it applies regardless of whether or not the employer is considered “large” (with at least 50 full-time equivalent employees) and therefore subject to the employer mandate provisions of the ACA.
The notice must be delivered to every employee, full-time and part-time, and whether or not they have health plan coverage. As an employer, you are not required to give any notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.
Luckily, the Department of Labor has provided two models of such a notice: one for employers that do not offer a health plan and another for employers that do offer health benefits to some or all employees. Employers may use one of these models, as applicable, or a customized version, provided the notice meets the content requirements:
- First it must give basic information on Covered California (the health insurance exchange/marketplace here in California): that it exists, a description of its services and contact information.
- Secondly, an explanation that an employee may be eligible for a tax credit on premiums if they purchase coverage through the marketplace. In cases where said employee already receives benefits via their employer, they might be eligible if the employer plan covers less than 60% of allowable claims (thus not providing minimum value).
- Thirdly, it should note that any employer contribution to a health benefits plan may be lost if the employee chooses to purchase coverage through the marketplace, and that the employer contribution may have been excludable from federal income tax.
The model notices, however, are not just boilerplate language that can be photocopied and dispersed to current employees and new hires or posted to a bulletin board. There are a few details you as an employer will need to fill in.
Both forms, regardless of whether coverage is provided or not, require employer identifying and contact information. However, the form for employers with group health insurance coverage also requires:
- Information on to whom health coverage is offered and the eligibility requirement and whether dependents may obtain coverage and the rules for their eligibility
- A checkbox to indicate whether the coverage is affordable and meets the minimum value standard (under the affordable coverage requirement, the employee’s share of the premium may not exceed 9.5% of annual household income, and to meet minimum value requirements, the plan’s share of the cost of coverage must be at least 60%)
- The name and contact information for someone with more information about employer-sponsored coverage, which may include a human resources contact or even a broker or third party administrator.
Given the money and effort Covered California is soon going to expend to advertise the availability of insurance through the Exchanges, most employees probably will be aware of its existence. But mandate or no mandate and October 1st deadline or not, you as an employer have the opportunity to ensure that you are your employees’ trusted source of ACA information and options.