As the owner of a new small business in Arizona, Dr. Sarah Bashaw cannot afford group health insurance but she would like her employees to be covered.
“I think it is important they have insurance,” Bashaw said.
So the veterinarian offers a stipend to full-time employees of her clinic to help them obtain insurance on their own. Of four eligible employees, two have taken advantage of the offer. The other two have gotten coverage through their parents’ plans.
Bashaw’s unconventional medical-insurance benefit puts her into a gray area when it comes to a requirement of U.S. employers under the Patient Protection and Affordable Care Act. The law requires most employers regardless of size to provide a written notice to employees by Oct. 1, informing them of their coverage options.
Employers with fewer than 50 full-time-equivalent workers aren’t obligated by the new law to provide health insurance, but virtually all employers are obliged to give employees notice about the coming Health Insurance Marketplace established by the Affordable Care Act.
The U.S. Department of Labor has posted online model notices that employers may use. There’s a version for employers that offer health-insurance
benefits and a version for employers that don’t
That’s where Bashaw hit a snag. Which notice should she use? she wondered.
“Do I offer health insurance or not?” she asked colleagues on a message board
of the Veterinary Information Network (VIN), an online community for the profession. “I kind of do.”
She was perplexed further by oblique language on the notice to be given by employers that offer health coverage. “It has a statement at the bottom that says, ‘An employer-sponsored health plan meets the “minimum value standard” if the plan’s share of the total allowed benefit costs covered by the plan is no less than 60 percent of such costs,’ ” Bashaw said. “What the heck does that mean?”
Hers were just two of the numerous questions posted on the same message board, demonstrating that dealing with even just one aspect of the complicated health-care overhaul law can induce consternation and befuddlement.
Other questions practice owners raised: How do you ensure employees have read the notice? Should they be asked to sign a statement acknowledging receipt? How should the notice be given? In person? By email? By regular mail? Is there a penalty for missing the deadline?
More information for small businesses
The flurry of questions prompted VIN General Counsel Raphael Moore to prepare for VIN members answers to frequently asked questions
. “Meeting the requirements is easy,” he offered soothingly on the message board. “Don’t fret.”
Here’s a summary of what Moore found:
- The notice requirement applies to all employers covered under the Fair Labor Standards Act. That generally means employers with at least $500,000 in annual gross receipts and that are engaged in or produce goods for interstate commerce. Engaging in interstate commerce includes purchasing equipment and supplies from other states and servicing patients across state lines.
- The notice need be provided only once to employees. For current employees, the deadline is Oct. 1. Future hires must be given the notice within 14 days of their employment. Notice must be given to all employees, full-time and part-time.
- The notice informs employees about the insurance marketplace, lets them know that they may be able to obtain less-expensive insurance through the marketplace — depending upon their income and what coverage their employer offers — and informs them that if they buy insurance through the marketplace, they may lose employer contributions to their health benefits.
- Department of Labor guidance isn’t explicit about how the notice should be delivered: “It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.” The agency does not address hand delivery. Moore advises, “Conservatively speaking … the easiest way to comply … is to send it out by first-class mail and keep a record of having done so."
- While the Affordable Care Act provides for a fine of $100 per day for non-compliance, the Department of Labor states that the government will not penalize employers that fail to provide the notices.
As for Bashaw’s situation, Moore said it doesn’t appear that she offers a health plan as defined by the government. For those who do provide insurance but don’t know whether it meets the “minimum value standard,” Moore suggested asking the insurance provider or using one of the various calculators that are available online. One such calculator
is available from Petz Enterprises, LLC, makers of professional tax software
Trying to sort out what she needed to do, Bashaw said that early on, “I thought my head was going to explode! It shouldn’t be that hard to do the right thing.”
But now that she’s received some guidance and is more familiar with the requirement, Bashaw said in an interview by email, “I feel like complying with the notice isn’t going to be that big of a deal.”
Bashaw is hopeful the new system will provide more affordable options for her employees. “The bottom line is, I want my employees to have some type of coverage — at least catastrophic if not something that helps with their day-to-day medical needs,” she said. “I’m not sure I can offer what they need (group insurance is just so expensive for a small group!) so hopefully they can find something through the marketplace. I even noticed that maybe there are small-business options there as well, so I will be looking into that, too.”