I have answered A LOT of questions about the ObamaCare October 1st notice requirement lately. Most of the questions are pretty similar. This answers those questions. If you still need help, you know how to reach me – and if you don’t know how to reach me, then jump immediately to the last paragraph of this post.
ObamaCare (the Affordable Care Act for the 3 politically correct people who read this blog) amends the Fair Labor Standards Act (FLSA) to require employers of all sizes to provide their employees a notice of the availability of coverage through public health insurance exchanges by October 1, 2013.
The FLSA exchange notice, which must be given by October 1, 2013, needs to include a description of the existence of, and services provided by, public exchanges. The notice must:
- Explain how the employee may be eligible for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements;
- Inform employees that if they purchase a qualified health plan through the exchange, then they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of the employer contribution to employer-provided coverage may be excludable for federal income tax purposes;
- Include contact information for customer service resources within the exchange, and an explanation of appeal rights;
- Meet certain accessibility and readability requirements; and
- Be in writing.
The Department of Labor has two model notices – one for employers who offer a health plan to some or all employees and another for employers who do not. The model notice for employers who offer a health plan includes two parts.
Part A (entitled “General Information”) tracks the requirement of the statute.
Part B (entitled “Information About Health Coverage Offered by Your Employer”) solicits information about the employer’s group health plan coverage that is intended to assist employees who apply for subsidized coverage under a group health plan product offered through the exchange. Part B includes an optional section that asks the employer to disclose whether the health care coverage offered meets the minimum value standard and whether the cost of coverage is intended to be affordable. While not required, employers may decide to complete this part of the notice in order to avoid having to respond to inquiries from exchanges seeking to process an individual’s application.
The notice requirement applies to all employers who are subject to the FLSA. In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most companies, a test of not less than $500,000 in annual dollar volume of business applies.
The question of who, exactly, is an employee is an important one. ObamaCare’s exchange notice requirement amends the FLSA. Thus, while the Internal Revenue Code and ERISA look to the “common law” standard, applicable court precedent interpreting the FLSA’s use of the term “employee” relies on the broader, “economic realities” test. Accordingly, an individual is an “employee” for FLSA purposes if he or she is economically dependent on the business for which he or she performs personal services. Thus, individuals properly classified as independent contractors for tax purposes may nevertheless be employees to whom notice must be provided for FLSA purposes.
Delivery can be in hand, by first class mail, or electronically, so long as employees have the ability to access documents furnished in electronic form at any location where the employee is reasonably expected to perform duties as an employee. From this definition, sending the notice to a group of construction workers’ personal email that they retrieve from their home computer after hours is not permitted.
For those of you fed up with ObamaCare and trying to figure out how to comply with its thousands of pages of regulations, perhaps you can take solace in the fact that the Act does not appear to impose any separate penalty for ignoring the notice requirement. This does not mean, of course, that noncompliance is a good idea or even a viable option. The lack of penalties does not translate to a lack of consequences.
Matt Austin is a Columbus, Ohio employment lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can email Matt at Austin@LaborEmploymentOSHA.com or call him at 614.285.5342.