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Even small employers notsubject to the Affordable Care Act’s (ACA) coverage mandate can’t reimburse employees for nongroup health insurance coverage purchased on a public exchange, the Internal Revenue Service confirmed. But small employers providing premium reimbursement in 2014 are being offered transition relief through mid-2015.

IRS Notice 2015-17, issued on Feb. 18, 2015, is another in a series of guidance from the IRS reminding employers that they will run afoul of the ACA if they use health reimbursement arrangements (HRAs) or other employer payment plans—whether with pretax or post-tax dollars—to reimburse employees for individual policy premiums, including policies available on ACA federal or state public exchanges.

This time the warning is aimed at small employers—those with fewer than 50 full-time employees or equivalent workers. While small organizations are not subject to the ACA’s “shared responsibility” employer mandate to provide coverage or pay a penalty (aka Pay or Play), if they do provide health coverage it must meet a range of ACA coverage requirements.

“The agencies have taken the position that employer payment plans are group health plans, and thus must comply with the ACA’s market reforms,” noted Timothy Jost, J.D., a professor at the Washington and Lee University School of Law, in a Feb. 19 post on the Health Affairs Blog. “A group health plan must under these reforms cover at least preventive care and may not have annual dollar limits. A premium payment-only HRA or other payment arrangement that simply pays employee premiums does not comply with these requirements. An employer that offers such an arrangement, therefore, is subject to a fine of $100 per employee per day. (An HRA integrated into a group health plan that, for example, helps with covering cost-sharing is not a problem).”

Transition Relief

The notice provides transition relief for small employers that used premium payment arrangements for 2014. Small employers also will not be subject to penalties for providing payment arrangements for Jan. 1 through June 30, 2015. These employers must end their premium reimbursement plans by that time. This relief does not extend to stand-alone HRAs or other arrangements used to reimburse employees for medical expenses other than insurance premiums.

No similar relief was given for large employers (those with 50 or more full-time employees or equivalents) for the $100 per day per employee penalties. Large employers are required to self-report their violation on the IRS’s excise tax form 8928 with their quarterly filings.

“Notice 2015-17 recognizes that impermissible premium-reimbursement arrangements have been relatively common, particularly in the small-employer market,” states a benefits brief from law firm Spencer Fane. “And although the ACA created “SHOP Marketplaces” as a place for small employers to purchase affordable [group] health insurance, the notice concedes that the SHOPs have been slow to get off the ground. Hence, this transition relief.”

Subchapter S Corps.

The notice states that Subchapter S closely held corporations may pay for or reimburse individual plan premiums for employee-shareholders who own at least 2 percent of the corporation. “In this situation, the payment is included in income, but the 2-percent shareholder can deduct the premiums for tax purposes,” Jost explained. The 2-percent shareholder may also be eligible for premium tax credits through the marketplace SHOP Marketplace if he or she meets other eligibility requirements.


Employers can pay for some or all of the expenses of employees covered by Tricare—a Department of Defense program that provides civilian health benefits for military personnel (including some members of the reserves), military retirees and their dependents—if the payment plan is integrated with a group health plan that meets ACA coverage requirements.

Higher Pay Is Still OK

One option that the IRS will allow employers is to simply increase an employee’s taxable wages in lieu of offering health insurance. “As long as the money is not specifically designated for premiums, this would not be a premium payment plan,” said Jost. “The employer could even give the employee general information about the marketplace and the availability of premium tax credits as long as it does not direct the employee to a specific plan.”

But if the employer pays or reimburses premiums specifically, “even if the payments are made on an after-tax basis, the arrangement is a noncompliant group health plan and the employer that offers it is subject to the $100 per day per employee penalty,” Jost warned.

“Small employers now have just over four months in which to wind down any impermissible premium-reimbursement arrangement,” the Spencer Fane brief notes. “In its place, they may wish to adopt a plan through a SHOP Marketplace. Although individuals may enroll through a Marketplace during only annual or special enrollment periods, there is no such limitation on an employer’s ability to adopt a plan through a SHOP.” 

What You Need to Know about the Small Business Health Care Tax Credit

July 17 - Posted at 2:01 PM Tagged: , , , , , , , ,

For tax years 2010 to 2013, the maximum credit is 35% of medical premiums paid for small business employers and 25% of medical premiums paid for small tax-exempt employers, such as charities.


For tax years beginning in 2014 or later, there are changes to the credit:


  • The maximum credit increases to 50% of medical premiums paid for small business employers and 35% of medical premiums paid for small tax-exempt employers. 
  • To be eligible for the credit, a small employer must pay medical premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace or qualify for an exception to this requirement.
  • This credit is available to eligible employers for two consecutive taxable years.



Here’s what this means for you: If you pay $50,000 a year toward health care premiums for employees — and if you qualify for a 15% credit, you save… $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20%, your savings go from $7,500 a year to $10,000 a year.



Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.


There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability. Refund payments issued to small tax-exempt employers claiming the refundable portion of credit are subject to sequestration. For more information on sequestration, click here


And finally, there may still be time to file an amended return to benefit from the credit this year. Generally, a claim for refund must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.


Can you claim the credit?

Now that you know how the credit can make a difference for your business, let’s determine if you can claim it.


To be eligible for the credit,  you must:

  • cover at least 50% of the cost of employee-only (not family or dependent) health care coverage for each of your employees
  • have fewer than 25 full-time equivalent employees (FTEs)
  • have average wages of less than $50,000 (as adjusted for inflation beginning in 2014) per year
  • purchase group medical insurance through the SHOP Marketplace (or qualify for an exception to this requirement) to be eligible for the credit for tax years 2014 and beyond.


How do you claim the credit?

You must use IRS Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941.


If you are a small business, include the amount as part of the general business credit on your income tax return.

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don’t ordinarily do so.

Exchanges Gear Up for 2015 Open Enrollment Period

July 08 - Posted at 2:01 PM Tagged: , , , , , , , , , , , , ,

As fall approaches, both state and federal Exchanges created by the Affordable Care Act (ACA) are preparing for potential opportunities and challenges they may face during the 2015 open enrollment period. The start date for the Exchange open enrollment has been delayed by a month, beginning on November 15, 2014, and will run through February 15, 2015.  Those desiring coverage beginning January 1, 2015 must enroll by December 15, 2014.


This delay will help to ease some enrollment pressure points, but does not address some of the challenges associated with a new automatic renewal policy. Specifically, the Obama Administration and the Department of Health and Human Services (HHS) just announced a proposed rule to automatically renew existing Exchange health plans and premium subsidies for 2015 that individuals obtained in 2014.   


Automatic Renewal Concerns

A key feature of the 2015 open enrollment period is implementation of the automatic renewal system. Consumers who do not return to the website and change their plan or eligibility information will be automatically re-enrolled in their current  plan from the previous enrollment period for the 2015 plan year. The overall goal is to relieve pressure on the Exchange website while allowing for roughly 95% of consumers to re-enroll in health plans. However, automatic re-enrollment raises issues with the subsidy programs operated by the Exchanges. 


Beginning in 2015, the automatic re-enrollment function is likely to cause issues with consumers that have a different income levels than the previous year. With the automatic re-enrollment feature, most consumers may not report changes in their income, thus creating discrepancies in subsidy distributions. For instance, if someone experiences a decrease in income from the previous year, but the change is not reported due to the automatic re-enrollment, the consumer may not receive subsidies that he/she is eligible for, and vice versa if the consumer’s income increases. With roughly 87% of consumers enrolled in an Exchange plan receiving subsidy tax credits, resolving this issue will be key to the success of the upcoming enrollment period.  


In addition, reports continue to surface that the IRS has not been able to document the reported income for several million Americans who enrolled an Exchange plan for the 2014 plan year.  Therefore, hundreds of thousands of individuals may end up receiving subsidies for two different plan years, which they might not qualify for resulting in an unexpected tax burden, interest and penalties. 


Open Enrollment Period Delayed

Despite the issues plaguing the Exchanges, a recent change in the date of the 2015 open-enrollment period may help alleviate some of the future website and enrollment strains. This spring, the Obama Administration announced a month-long extension of the 2015 open enrollment period until February 15, 2015.   An initial delay was announced last fall that pushed back the start date from October 15 to November 15, 2014.  As a result of these changes, insurance companies will benefit from the delay, consumers will have more time to enroll in an Exchange plan, and websites hope to have fewer technical and administrative hiccups.  However, some have expressed concerns that the White House continues to make up the rules as they go along which violates normal regulatory protocols associated with a statutory-based initiatives like the ACA.  


While the Exchanges prepare for the new open enrollment season, some problems from the previous open enrollment likely remain unresolved. As widely reported earlier, both and its state-level Exchanges experienced a slew of technical issues and glitches in the 2014 open enrollment that hampered enrollment and significantly increased the wait time for enrollment activation for many.  


Verifying Income Levels

Other technical issues have hampered enrollment, such as the lack of oversight in filling out applications on the Exchange websites. The delay in’s verification requirement has led to chaos in the federal Exchange, as well as in states that use the federal Exchange, by implementing an “honor system” where individuals self-report their income without having to provide proof. As a result, HHS and the IRS must verify the incomes of a backlog of roughly 2 million individuals for federal subsidy eligibility.  


AAG  will continue tracking and reporting on key health care reform changes that will affect employers and individuals alike.

Can corporations shift targeted workers who have known high medical costs from the company health plan to public exchange (aka Marketplace/SHOP) based coverage created by the Affordable Care Act? Some employers are beginning to inquire about it and some consultants are advocating for it.


Health spending is driven largely by those patients with chronic illness, such as diabetes, or those who undergo expensive procedures such as an organ transplant. Since a large majority of big corporations are self-insured and many more smaller employers are beginning to research this as an option to help control their medical premiums, shifting even one high-cost member out of the company health plan could potentially save the employer hundreds of thousands of dollars a year by shifting the cost for the high-cost member claims to the Marketplace/SHOP plan(s).


It is unclear if the health law prohibits this type of action, which opens a door to the potential deterioration of employer-based medical coverage.


An employer “dumping strategy” can help promote the interests of both employers and employees by shifting health care expenses on to the public through the Marketplace.


It’s unclear how many companies, if any, have moved any of their sicker workers to exchange coverage yet, which just became available January 1, 2014, but even a few high-risk patients could add millions of dollars in claim costs to those Marketplace plans. The costs could be passed on to customers in the next year or two in the form of higher premiums and to taxpayers in the form of higher subsidy expenses.


A Possible Scenario


Here’s an example of how an employer “dumping-situation” it might work:


At renewal, an employer reduces the hospital/doctor network on their medical plan to make the company health plan unattractive to those with chronic illness or high cost medical claims. Or, the employer could raise the co-payments for drugs or physician visits needed by the chronically ill, also making the health plan unattractive and perhaps nudging high-cost workers to examine other options available to them.


At the same time, the employer offers to buy the targeted worker a high-benefit “platinum” plan in the Marketplace. The Marketplace/SHOP plan could cost $6,000 or more a year for an individual in premiums, but that’s still far less than the $300,000 a year in claim costs that a hemophilia patient might cost the company.


The employer could also give the worker a raise so they could buy the Marketplace/SHOP policy directly.


In the end, the employer saves money and the employee gets better coverage. And the Affordable Care Act marketplace plan, which is required to accept all applicants at a fixed price during open enrollment periods, takes over the costs for their chronic illness/condition.


Some consultants feel the concept sounds too easy to be true, but the ACA has set up the ability for employers and employees to voluntarily choose a better plan in the Individual Marketplace which could help save a significant amount of money for both.


Legal but ‘Gray’


The consensus among insurance and HR professionals is that even though the employer “dumping-strategy” is technically legal to date (as long as employees agree to the change and are not forced off the company medical plan), the action is still very gray. This is why many employers have decided this is not something they want to promote at this time.


Shifting high-risk workers out of employer medical plans is prohibited for other kinds of taxpayer-supported insurance. For example, it’s illegal to persuade an employee who is working and over 65 to drop company coverage and rely entirely on the government Medicare program. Similarly, employers who dumped high-cost patients into temporary high-risk pools established originally by the ACA health law are required to repay those workers’ claims back to the pools.


One would think there would be a similar type of provision under the Affordable Care Act for plans sold through the Marketplace portals, but there currently is not.


The act of moving high-cost workers to a Marketplace plan would not trigger penalties under ACA as long as an employer offers an affordable medical plan to all eligible employees that meets the requirements of minimum essential coverage, experts said.  If  workers are offered a medical plan by their employer that is affordable coverage and meets the minimum essential coverage requirements, workers cannot use tax credits to help pay for the Marketplace-plan premiums.


Many benefits experts say they are unaware of specific instances where employers are shifting high-cost workers to exchange plans and the spokespeople for AIDS United and the Hemophilia Federation of America, both advocating for patients with expensive, chronic conditions, said they didn’t know of any, either.


But employers are becoming increasingly interested in this option.


This practice, however, could raise concerns about discrimination and could cause decreased employee morale and even resentment among employees who are not offered a similar deal, which could end up causing the employer more headaches and even potential discrimination lawsuits.


Many believe that even though this strategy is currently an option for employers, in the end, it may not be a good idea. This type of strategy has to operate as an under-the-radar deal between the employer and targeted employee and these type of deals never work out. Most legal experts who focus on employee benefits do not recommend this strategy either as it just opens the door of discrimination claims from employees.


Please contact our office for assistance in reviewing all of the benefit options available to your company and employees under ACA.

Changes Coming for Small Business Health Care Tax Credit

October 16 - Posted at 2:01 PM Tagged: , , , , , , ,

For tax years 2010 – 2013, eligible small employers are entitled to a 35% tax credit for health insurance premiums they pay for employees. Tax-exempt entities are eligible for a 25% credit.


To qualify for the credit, an employer must:


  • Have fewer than 25 full-time equivalent (FTE) employees for the tax year


  • Pay average annual wages of less than $50,000 per FTE


  • Pay no less than 50% of the premium for qualifying employee health insurance


Employers with less than 10 FTEs and average annual wages of $25,000 or less are eligible for the full credit. There is a phase-out of the credit for employers that have between 10 and 25 FTEs or average annual wages between $25,000 and $50,000.


All employers calculate the credit using IRS Form 8941, Credit for Small Employer Health Insurance Premiums. Taxable employers claim the credit on their federal tax return and can apply the credit to both regular and alternative minimum tax. Tax-exempt employers claim the credit by filing Form 990-T, Exempt Organization Business Income Tax Return, and can receive a refundable credit up to the amount of the employer’s payroll taxes.


Changes in 2014


In 2014, the credit will continue to be available, but with significant modifications. Employers will only be eligible for the credit if they purchase health insurance through the new Small Business Health Options Program (SHOP). The SHOP is one component of the internet-based health insurance marketplace, also known as an exchange, which launches on Oct. 1, 2013.


Other upcoming changes include:

  • The maximum credit increases to 50% (or 35% for tax-exempt organizations)


  • The $50,000 and $25,000 average annual dollar amounts will be indexed for inflation


  • The credit is based on the lesser of the employer’s actual premium payments or the average premiums in the small group market in its employees’ rating area


  • The credit is only available for two consecutive tax years after 2013, but it can be carried back or carried forward

FAQs for Federally Facilitated Marketplace (FF-SHOP) on Tobacco Rating

September 27 - Posted at 2:01 PM Tagged: , , , , , , , , ,

CMS recently issued a list of FAQs regarding the Federally Facilitated Marketplace (FF-SHOP aka Marketplace aka Exchange) and how they will handle the issue of tobacco rating for medical plans.


Q1: If an employee or an employee’s dependent obtaining coverage through the FF-SHOP uses tobacco, how can the employee or dependent avoid the tobacco premium rating surcharge?


A1: The FF-SHOPs will not impose the tobacco rating surcharge at the time of initial enrollment (or re-enrollment) if the employee or dependent, as applicable, agrees at the time of enrollment (or renewal or re-enrollment) to participate in a wellness program meeting the standards of section 2705 of the Public Health Service Act, such as a tobacco cessation program.


Q2: If an employee or enrollee’s dependent who is already enrolled in coverage through the FF-SHOP decides to participate in a wellness program in the middle of the plan year after initially declining to participate, will his/her premium be reduced immediately or retroactively to the time of enrollment?


A2: In the FF-SHOPs, an employee’s or employee’s dependent’s premium will be established for a period of one year upon enrollment, renewal, or re-enrollment of that employee or dependent. At that time, the enrollee or dependent can agree to participate in a wellness program to avoid the tobacco premium surcharge. If the employee or dependent does not agree at that time to participate in such a wellness program, the employee/dependent will have an opportunity to avoid the tobacco premium surcharge upon renewal or re-enrollment.

FAQ on the Health Insurance Marketplace and Income Verification

September 24 - Posted at 2:02 PM Tagged: , , , , , , , , , , ,

The following is a frequently asked question recently released by CMS regarding the Marketplace and Income Verification for the purpose of advance payment of the premium tax credit and cost sharing reductions.


Q: Will Marketplaces verify the income of consumers as part of the eligibility process for advance payments of the premium tax credit and cost sharing reductions?


A: Yes. The Marketplaces will use data from tax filings and Social Security data to verify household income provided on an application, and in many cases, will also use current wage information that is available electronically. The multi-step process will begin when an applicant applies for insurance affordability programs (such as the advance payments of the premium tax credit and cost sharing reductions) through the Marketplace and affirms or inputs their projected annual household income. The applicant’s inputted projected annual household income is then compared with information available from the IRS and Social Security Administration (SSA). If the data submitted as part of the application process cannot be verified using IRS and SSA data, then the information is compared with wage information from employers provided by Equifax. If Equifax data does not substantiate the inputted information, the Marketplace will request an explanation or additional documentation to substantiate the applicant’s household income.


When documentation is requested, the Affordable Care Act and implementing regulations specify that if an applicant meets all other eligibility requirements, he/she will be provided with eligibility for advance payments of premium tax credit and cost sharing reductions based on the inputted projected annual household income for 90 days (which may be extended based on good faith), provided that the tax filer attests to the Marketplace that he/she understands that any advance payments of the premium tax credit paid on his/her behalf are subject to reconciliation. If documentation is requested and is not provided within the specified timeframe, regulations specify that the Marketplace will base its eligibility determination on IRS and SSA data, unless IRS data is unavailable. In this case, the Marketplace will discontinue any advance payments of the premium tax credit and cost sharing reductions.


Please note that applicants for advance payment of the premium tax credit and cost sharing reductions must attest, under penalty of perjury, that they are not providing false or fraudulent information. In addition to the existing penalties for perjury, the Affordable Care Act applies penalties when an individual fails to provide correct information based on negligence or disregard of program rules, or knowingly and willfully provides false or fraudulent info. Moreover, the IRS has said they will reconcile advance payments of the premium tax credit when consumers file their annual tax returns at the end of the year, and it will recoup overpayments and provide refunds when appropriate, subject to statutory limits.  

CMS Answers Key FF-SHOP Questions from Small Employers

September 20 - Posted at 2:01 PM Tagged: , , , , , , , , , , , , ,

Small businesses may participate in several federally facilitated Small Business Health Option Program (SHOP) exchanges – for example, if an employer has offices in different states – but each small employer is limited to establishing one FF-SHOP account per state.


If an employer has  worksites in several states, it may (1) establish an account in each state where the company has a primary work location for workers; or (2) it may establish an account in one state and use that to provide health insurance for all members of the group. If it does establish accounts in several states, it must submit a separate report on the participation rate to each FF-SHOP.


An employer is considered to be a small employer eligible for SHOP coverage if its average number of employees is 50 or fewer. Employers participating in the FF-SHOP must offer coverage to all full-time employees, defined as those working 30 or more hours per week on average.


The SHOP system is a way for employers to help satisfy health reform’s mandate for individuals to obtain coverage or pay extra taxes. Furthermore, most (34 out of 50, not including the District of Columbia) states will house (but not run) FF-SHOP exchanges.


In March 2013, the CMS released final rules that described the 70% participation requirement for small employers. Under those rules, insurers may deny coverage to small employers that fail to meet the minimum participation requirements.


Minimum Participation


Insurers may impose a 70% workforce participation requirement for small employers to partake in FF-SHOP coverage. In the first open enrollment period (Nov. 15 through Dec. 15, 2013), however, workers can obtain coverage on an interim basis even if an employer falls below the minimum participation amount, according to CMS. On renewal one year later, however, insurers will be able to invoke the participation requirement. State law may impose a different minimum participation requirement. Small employers are required to keep records of coverage held by workers to substantiate minimum participation and to ensure that workers do not have double coverage.


Other Highlights


Here are a few other policies small employers will want to know when considering group coverage with an FF-SHOP:


  • The employer’s principal business address will determine premium rate factors, not the worker’s home address


  • The FF-SHOP will not allow varying coverage for different classes of employees, whether they are owners, salaried or hourly


  • The FF-SHOP exchanges will allow for coverage for retirees, but they must pay the same contribution rate as active employees


  • COBRA enrollees are eligible and they are included in minimum participation rate calculations. Their premiums will be calculated based on health care reform’s allowed rating factors- age & tobacco use


  • Insurers are responsible for making sure that Summary of Benefits and Coverage (SBCs) are given to small employer group plan sponsors and members


  • If an employer group in the FF-SHOP allows coverage of domestic partners but an insurer on the exchange does not, then the domestic partner may be added as a dependent and the insurer would be expected to cover the partner as a dependent according to CMS


  • Employers will be notified of the option to renew SHOP coverage 90 days before the end of the plan year. They have that time to decide whether to continue with existing coverage and help employees enroll or renew. If the employer elects to stay with the same “qualified health plan” employees can be automatically renewed into that plan.

Exchange Open Enrollment Notice Must Be Distributed by 10/1/13

September 12 - Posted at 2:02 PM Tagged: , , , , , , , , , , , , , ,

Beginning January 1, 2014, all individuals and employees of small businesses will have access to purchase health coverage through the Health Insurance Marketplace (aka the Exchange or SHOP). Open enrollment for the Marketplace begins October 1, 2013.


Section 1512 of the Affordable Care Act requires all employers to provide the Exchange notice to all employees (regardless of full or part time status or plan enrollment status)  no later than October 1, 2013. The notice must also be supplied to all new hires within 14 days of their hire date. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan if they are not employees.


The purpose of the notice is to:


1) inform employees of the existence of the Marketplace (aka Exchange) and how they can contact the Marketplace for assistance


2) inform employees if their current plans meets minimum value standards for the purpose of determining if they will be eligible for a premium tax subsidy in the Marketplace


3) inform employees if they purchase coverage through the Marketplace they will lose the employer contribution to any health plans offered by the employer.


This notice can be provided to employees via paper or electronically. If you decide to post is on your company intranet, you must distribute a notice to all employees directing them where the notice can be located.


Even if you do not currently provide health coverage to employees, you are still required to distribute the Marketplace notice explaining this.


Please contact our office if you need a copy of the English or Spanish versions of the Exchange notice.

What Small Businesses Need to Do for Obamacare Before Oct 1st

September 09 - Posted at 2:01 PM Tagged: , , , , , , , , , , , ,

The health insurance Marketplace created by the Affordable Care Act (ACA) will open on October 1st. Most small employers (those with 50 or fewer full-time employees) are not required to offer health insurance coverage under ACA. Businesses with more than 50 full time employees have gotten a one year reprieve from the “pay or play” penalties. But all companies, regardless of size, are required to notify their employees about the Obamacare Marketplaces by October 1st.


The state and federal insurance exchanges are websites on which individuals and small businesses can shop for health plans. Though the deadline is less than a month away, many small businesses  may not realize they have to notify employees of the existence of the Marketplace (aka Exchange). Many small business owners are unaware of this requirement or are under the misconception that it does not apply to them because they are too small to be governed by the health care reform law’s mandate. It is not clear how the requirement will be enforced yet, but penalties for businesses that do not comply could reach $100 per worker per day.


Some employers assume that because they are a small business who does not offer health insurance currently that the requirement does not apply to them. The Exchange notification requirement applies to any business regulated under the Fair Labor Standards Act (FLSA), which covers all companies with at least one employee and $500,000 in annual revenue.


The U.S. Department of Labor has posted information about the notification requirement on its website and has provided model notices (in both English & Spanish) to be used by both employers who offer insurance and those who do not offer insurance.


The one to three page model notices can be downloaded, filled out, and printed, either for distribution in the workplace or for mailing to employees’ homes. Employees who are hired after October 1st must be provided  the notice within 14 days of their date of hire with the company. Employees must be provided the notice, regardless of their enrollment status in the group’s medical plan.  The safest route is to distribute the notice via U.S. mail or follow the instructions for distributing it electronically. Currently there is no requirement that states the employer must obtain signatures from employees confirming their receipt of the notice.


Please contact our office for more information on how to ensure you business is compliant with ACA requirements in 2014.

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