Affordable Care Act Alert: State Exchange Notification Requirements

Affordable Care Act Alert

Considerable confusion has arisen in the employer community about the State health care exchange notice that most employers must provide to all employees no later than October 1. (Employers not subject to the Fair Labor Standards Act [FLSA] – generally, only employers with less than $500,000 in annual gross receipts — are not required to provide the notice.  However, all Federal, State and local governmental entities, all schools and all residential healthcare facilities are subject to the FLSA, regardless of size and therefore are required to provide the notice.)

There are two versions of model language for this notice, both versions are available on the Department of Labor’s website at http://www.dol.gov/ebsa/healthreform/index.html or via the downloadable PDF files: Exchange Notice – Offered | Exchange Notice – Not Offered.  The first model is used by employers that sponsor a health plan.  The second is used by employers that do not sponsor health plans.

The form notice used by employers that do not sponsor a health plan is relatively straightforward.

However, the form notice for use by employers that sponsor health plans is quite confusing.  The good news is that, when the detailed guidance is reviewed, it is clear that employers that sponsor health plans only need to complete and provide the first of the three pages of the form notice, and discard pages two and three.

It appears that a number of employers are providing the first two pages of the model notice because the second page, if voluntarily completed by the employer, includes information that may be useful to employees.  (If the second page is not provided, note that a reference to “Part A” on page one should be deleted to avoid confusing readers.)

Of course, like any required benefit notice, employers should keep convincing proof that they provided the exchange notice no later than October 1 to all employees – not just those participating in their health plan.

Finally, for new employees who start work after October 1, 2013, a copy of the notice must be provided no later than 14 days after the employee’s date of hire.

Please contact the KatzAbosch Tax Department at 410-828-2727 or by email at jeaton@katzabosch.com if we can be of assistance concerning your State exchange notice efforts.

We appreciate the assistance of noted employment attorney Henry Smith from the law offices of Smith & Downey, PA.

prepared by James F. Eaton, III, CPA, MBA

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