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Employer Notices Regarding Health Care Exchange Due Oct. 1, 2013

Posted 6:33 PM by

While the employer mandate has been delayed until 2015, most of the other provisions of the Patient Protection and Affordable Care Act (PPACA or ObamaCare) are still on target to take effect as originally proposed. One important deadline is the Oct. 1, 2013 notice requirement created by Section 1512 of the PPACA. This notice requirement applies to all employers covered by the Fair Labor Standards Act (FLSA), even if the employer does not offer a health insurance plan to its employees.

Does FLSA apply?

In general, the FLSA applies to any employer engaged in interstate commerce who employs one or more people and whose sales are greater than $500,000 per year.

In addition to operating businesses, the FLSA also applies to the following types of entities:

  • Hospitals
  • Institutions primarily engaged in the care of the sick, the aged, or the mentally ill or developmentally disabled who live on the premises
  • Pre-school, elementary or secondary school, or institutions of higher learning
  • School for mentally or physically handicapped or gifted children
  • Federal, state, or local government agency

Employers can utilize the Department of Labor's (DOL) assessment tool to determine if the FLSA applies to their business:

Who should receive the notice?

FLSA-covered employers must provide a notice of coverage options to all current employee (full- or part-time). Employers are not required to provide a separate notice to dependents or any other non-employees covered or eligible for the health plan.

What should the notice include?

The notice must inform employees of their coverage options and should include information regarding the new Health Insurance Marketplace (Marketplace), also known as state exchanges. Specifically, the notice should include:

  • Contact information for and services provided by the Marketplace
  • Information on how an employee may be eligible for a premium tax credit if they purchase coverage through the exchange
  • A statement that if an employee purchases a plan through the exchange, they could lose their employer contribution to any health benefits offered by the employer

A sample notice can be found on the DOL's website: (Note: The website includes one sample notice for employers who offer a health plan and a second sample notice for employers who do not offer a health plan.)

When does the notice need to be provided?

The employer must provide the notice to all current employees (full- or part-time) by Oct. 1, 2013. Any new employee hired on or after Oct. 1, 2013 should receive the notice no later than 14 days after their start date. The notice must be in writing and can be delivered in any one of three ways:

  1. Employers may hand deliver the notice to each employee
  2. Employers may mail the notice via first-class U.S. Mail to each employee
  3. Employers may deliver the notice electronically to each employee if the DOL's electronic disclosure safe harbor requirements are met (29 CFR 2520.104b-1(c))

For more information, contact your KSM advisor.

About the Author
Jim White is a member of Katz, Sapper & Miller’s Restaurant Services Group. Jim guides restaurant owner-operators through tax compliance issues and helps them plan strategies to minimize tax liabilities and maximize savings. Connect with him on LinkedIn.

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