Employers, Large or Small: Obamacare Requires Action by October 1

Federal law requires employers to provide written notification to employees regarding their health care options.

​Date: September 2013

As part of the Patient Protection and Affordable Care Act (“Obamacare”), health insurance marketplaces will become available for individuals and small businesses on October 1, 2013. On that date, individuals and small businesses may create an insurance marketplace account and learn the health insurance options available to them.

By October 1, 2013, any employer subject to the Fair Labor Standards Act governing minimum wage and overtime (which most employers with even one employee are) must give written notice to every employee to inform them:

  1. of the existence of the new health insurance marketplace, the services provided, and the manner in which the employee may contact the marketplace
  2. that, depending on their income and what coverage may be offered by the employer, employees may be able to purchase lower cost private insurance in the marketplace; and
  3. that, if the employee purchases a qualified health plan through the marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer, and all or a portion of such contribution may be excludable from income for federal income tax purposes.

Fortunately, you don’t have to compose the notice; the U.S. Department of Labor offers model notices for employers who (a) currently offer health insurance to some or all employees and (b) currently do not offer health insurance to employees. The notice may be provided by first-class mail, or electronically if the requirements of 29 CFR 2520.104b-1(c) are met (those requirements deal mainly with confidentiality and ensuring receipt). For employees who begin their employment after October 1, 2013, the notice must be provided to them within 14 days of their starting date.

Initially, many employers were concerned that the general $100-per-day fine for non-compliance with Obamacare would apply to the notice requirement. That should not be a concern; on September 12, 2013, the Labor Department announced that failure to comply with the notice requirement will not result in a penalty or fine. Although it is now clear that there is no financial or legal consequence for failure to comply with the notice requirement, employers are encouraged and expected to voluntarily comply.​

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