Affordable Care Act - Tax Provisions for Employers

September 19, 2013

For Immediate Release

Contact: Gigi Thompson Jarvis

202.822.6232, x119                                                       

gjarvis@naea.org

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.Affordable Care Act - Tax Provisions for Employers

WASHINGTON, DC (September 20, 2013)—Beginning January 1, 2014, individuals and employees of small businesses will have access to affordable coverage through a new competitive private health insurance market – the Health Insurance Marketplace. The Marketplace offers “one-stop shopping” to find and compare private health insurance options.

Open enrollment for health insurance coverage through the Marketplace begins October 1, 2013. Section 1512 of the Affordable Care Act creates a new Fair Labor Standards Act (FLSA) section 18B requiring a notice to employees of coverage options available through the Marketplace.

Employers Subject to the Notice Requirement

The requirement to provide a notice to employees of coverage options applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most businesses, a test of not less than $500,000 in annual dollar volume of business applies. The Department’s Wage and Hour Division provides guidance relating to the applicability of the FLSA in general, including an Internet compliance assistance tool to determine applicability of the FLSA. (See www.dol.gov/elaws/esa/flsa/scope/screen24.asp)

Providing Notice to Employees

Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status. 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 but who are not employees.

Form and Content of the Notice

The notice should inform employees:

  • About the Health Insurance Marketplace;
  • That, depending on their income and what coverage may be offered by the employer, they may be able to get lower cost private insurance in the Marketplace;
  • That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits; and
  • That the employee may be eligible for a premium tax credit under section 36B of the Code if the employee purchases a qualified health plan through the Marketplace.

The U.S. Department of Labor has two model notices to help employers comply. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan to some or all employees. The model notices are also available in Spanish and MS Word format and may be found on the Department of Labor website or by calling 1.866.444.3272.

Timing and Delivery of Notice

Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.

Employer Penalties for Failure to Provide Notice

If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013. However, on September 11, 2013 the Department of Labor announced that there will be no fine or penalty imposed on employers for failure to provide such notice.

For help with tax issues, consult an enrolled agent. EAs provide tax preparation; tax advice and tax planning services in addition to helping taxpayers resolve problems with the IRS. Enrolled agents are “America’s Tax Experts!” To find an enrolled agent in your area, visit the National Association of Enrolled Agents’ website at www.naea.org and click on the “Find an EA” link. 

© 2014 National Association of Enrolled Agents