As most employers have heard by now, the Affordable Care Act’s (ACA or Obamacare) requirement that employers with 50 or more employees offer appropriate, affordable health care insurance coverage, or suffer a significant penalty, was recently postponed for a year. However, what should be getting every employers attention is the October 1 ACA mandate requiring all employers to notify all employees of the mandated Health Insurance Exchanges.
As of Oct. 1, 2013, all employers subject to FLSA (which most businesses are), no matter how many employees, must provide a notice to all their employees regarding these insurance exchange programs being set up by Federal and State governments. While the regulations do not identify a specific penalty for failing to comply with this notice requirement, the Affordable Care Act specifies a $100-a-day penalty for general non-compliance. This notification falls into that category.
UPDATE: The DOL issued a clarification on Sept 11, 2013, stating that, for now, this required notification will not fall into the penalty category for failure to comply.
The Dept of Labor provides templates of 2 letters regarding notifying employees of the Health Insurance Exchanges.
For those employers who offer health insurance to their employees, they can use this template provided by the DOL.
For those employers who do not offer health insurance to their employees, they can use this template.
(Note: The Dept of Health and Human Services has announced that they will probably not meet the Oct 1, 2013 deadline for having these Health Insurance Exchanges created. As of this time, however, there is no indication from the DOL, IRS or the HHS that they are postponing this employer notification requirement.)
The ACA specifies that employers correct all compliance failures within 30 days of discovery or self report a $100-a-day penalty for failing to meet requirements. Employers are to use IRS Form 8928 to report their failure to comply for each day they did not comply with an ACA mandate. This requirement is just one of the wide range of mandates that will result in daily penalties that come with non-compliance with the myriad of ACA requirements. Besides this required Insurance Exchange notification, here are some other ACA regulations that can result in $100-a-day penalties:
- Failing to provide timely notices
- Violating the non-discrimination rules (These have not been written for insured plans)
- Failing to extend coverage to dependents to age 26
- Failing to cover preventative care
- Violating the limits restrictions
- Having retroactive rescission of benefits
- Employees having excessive out-of-pocket costs
- Failing to have a revised appeal process (including external appeals)
- Violating the restrictions on emergency room visits
- Violations of the 90-day waiting period limit
- Violating restrictions on designation of primary care physicians
- Improper pre-existing condition exclusions
Employers who simply assume that an insured plan complies with these requirements, or who assume that their self-funded plan already complies, could find themselves in a costly situation. The Advi$or strongly suggests that you meet with your health insurance professional and go over your plan thoroughly to make sure there are no violations of the ACA. This is particularly important now that employers are required to self-report penalties. Both the Internal Revenue Service and U.S. Department of Labor could become involved if an audit reveals they have failed to comply.
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