No Immediate Consequences for Late Notice But Businesses Should Still Comply Promptly

The October 1, 2013 Notice Deadline: The federal Patient Protection and Affordable Care Act (ACA or “Obamacare”) requires the state-by-state creation of the so-called “Health Insurance Marketplace” (“Marketplace” for short, also called the “Exchange”), a virtual one-stop shopping mall for access to private coverage. California’s exchange is “Covered California”: http://www.coveredca.com/. Each state exchange started offering such insurance options on October 1, 2013.

Also by October 1, all employers subject to another federal law –the Fair Labor Standards Act (FLSA) – were to give each of its workers a written notice of the existence of the Health Insurance Marketplace. The FLSA generally kicks in for companies grossing $500,000 or more annually and which are engaged in interstate commerce. “Interstate commerce” is a very broad term. A local farmer selling at the local Saturday market may not be considered engaging in interstate commerce. A local market selling goods originating from other states definitely is. The U.S. Department of Labor offers an online self-assessment for companies to determine if they are subject to the FLSA: http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

No Penalty Currently for Employers Who Missed that October 1 Date: While no business is comfortable missing a deadline, the U.S. Department of Labor has confirmed there are no penalties or fines for having missed this October 1, 2013 ACA notice date. See, http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html. Thus, while the notification is a legal requirement, it is in effect optional. However, since this optional status could be temporary, employers covered by the FLSA who have yet to comply should arrange to issue these notices as soon as possible.

Content of the ACA Notice: This required, yet optional, written notice must include three points: 1) inform the employee of the existence of the Marketplace/Exchange, including a description of its services and how the employee may contact the Marketplace for assistance; 2) describe how the employee may be eligible for a premium tax credit if he/she purchases a qualified health plan through the Marketplace; and 3) inform the employee that if he/she purchases a qualified health plan through the Marketplace, he/she may lose the employer contribution (if any) to any health benefits plan the employer offers as well as lose certain federal tax advantages.

The U.S. Department of Labor has published two templates for such notice, one for FLSA-covered employers who do not have a current health plan for their workers (see, http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf), the other for such employers who do offer such a plan for some or all of their workers (see, http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf).

For more information concerning employer’s obligations in this area, contact one of our attorneys Tim Bowles or Cindy Bamforth.