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There is a provision in the Patient Protection and Affordable Care Act (PPACA), commonly known as Obamacare, that may impact your organization. In general the PPACA requires all employers with gross revenue in excess of $500,000 plus all hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies to provide notices to current employees and new hires about the newly formed state and federal health insurance exchanges or marketplaces and subsidies that may be available.  Employers must provide a notice of coverage options to each employee, regardless of whether or not the employee participates in a group health plan. 

Timing and Method of Distribution

Employers should have provided initial notices to current employees by October 1, 2013.  In addition the employer must provide the notice to new hires, starting on or after October 1, 2013, within 14 days of the date of hire.  If you have not done so already we recommend that it be done as soon as possible.

The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first class mail, included in renewal packets, new hire kits, personally handed out or attached to paychecks. The employer must be sure that every employee has been provided the notice.

Model Notices

To help you comply with this requirement the Department of Labor (DOL) has created a website on the Affordable Care Act at www.dol.gov/ebsa/healthreform and published model notice language. Two model notices have been made available:

1.)  For employers who offer a health plan to some or all employees:


2.)  For employers who do not offer any health plan to any employee:


Employers may use the DOL’s model notices, as applicable, or use a modified version, provided the modified notice meets the content requirements. We recommend using the applicable model notice to satisfy your obligation.  It is also important to note that guidance from the DOL indicates that the current model notice language is temporary and may change.  As a result it would be prudent to continue to monitor the website for any changes.

Penalties for Failure to Provide Notice

A direct penalty is not provided for in the legislation that imposes this obligation on employers but there is a $100 per day penalty for not complying with the requirements included in the PPACA law.  The Department of Labor confirmed on September 11, 2013 that this penalty will not be assessed for failure to give employees the notices.  However, the employer is exposed to participant damage claims under ERISA for damages sustained as a result of the failure to receive information as directed under law.  Presumably, such damage claims would be enforceable against employers of organizations not subject to ERISA.

Even though penalties are not currently being assessed it is almost certain that they will be in the future.  Once again, if you have not supplied your employees with the required notices we recommend that it be done as soon as possible.

Employer Mandated Insurance Offering and Coverage Delayed

Turning to a positive note, on July 2 the Treasury Department of the Obama Administration announced that employers will be provided an additional year, until 2015, before penalties will be assessed under the employer play-or-pay mandate.  In general terms, the employer mandate applies to employers that have 50 or more full time equivalent employees.  The measurement period to determine if an organization had 50 or more full time employees begins January 1, 2014.

We are available to help our clients plan for and meet this and any other upcoming requirements of the PPACA. Depending on the specific circumstances that your organization faces we have ideas on how to best plan for and manage your obligations under this law.  We encourage you to contact us with any questions or concerns you may have.  If you would like our assistance in completing the notices to your employees please call Jane Holsbeke CPA in our office at 810-229-5550 or email at jholsbeke@phpcpa.com.