Employers of All Sizes Must Notify Employees of Health Coverage Options

The Affordable Care Act ("ACA") amends the Fair Labor Standards Act ("FLSA") to require employers of all sizes to notify their employees of the option to purchase healthcare coverage through the public insurance marketplaces.  Employers must provide this notification by October 1, 2013.

The FLSA prescribes standards for the basic minimum wage and overtime pay for both public and private employment, requires that the notice:

• 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;

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• 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 provided two model notices on its website - one for employers who already offer an employee health plan (model notice #1), and one for employers who do not (model notice #2).

The norice requirement applies to all employers who are subject to FLSA.  In general, this law applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce.  For most firms, a test of not less than $500,000 in annual dollar volune of business applies.

The FLSA also specifically covers the following entities, regardless of dollar volume of business:

• Hospitals;
• Institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises;
• Schools for children who are mentally or physically disabled or gifted;
• Preschools, elementary and secondary schools, and institutions of higher education; and
• Federal, state and local government agencies.

For an explanation of the reach of the FLSA, please click HERE.

[Citations: U.S. Dept. of Labor; Mintz Levin, 8/20/2013.]