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Healthcare Alert For Construction Industry: Employer Notification Deadlines Under The Affordable Care Act

By Matthew DeVries and Ozair Sharif

In the past two issues, we discussed the legal significance of “insurance” in the construction process. We were talking about faulty workmanship and construction defects on a project. As we turn to business practices within your company, let’s discuss another significant issue involving insurance—that is, health care insurance!

Employer notification. On October 1, 2013, a deadline passed that affected numerous businesses, including architectural, engineering, development and construction firms. Why are we talking about a deadline that passed, though? Well, as of that date, employers covered by the Fair Labor Standards Act (FLSA) were required to provide a written notice to their employees that described certain elements of the Health Insurance Exchanges expected to go into effect at the beginning of this month. Employers were able to choose from a number of options when distributing the notices, including a couple of notices published by the Department of Labor (See models at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf and http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf).

The good news is that you still have time to comply with the notification process. The Department of Labor made clear in a recently published online FAQ that there will be no fine or penalty under the law for failing to provide the notice1. As a result, employers should make every effort to ensure current and future employees are provided with the notification, even if they missed the October 1 deadline.

Section 1512 of the Affordable Care Act amended the FLSA and required notification of the health exchanges—the competitive online market for health insurance where individuals may purchase health plans—be given to employees by the October 1 deadline. While the requirement applies only to companies subject to the FLSA, this includes a large category of employers and will impact many private-sector employers and governmental entities.

Application to your business? The FLSA applies to

  • employers whose annual gross volume of sales total $500,000 or more;
  • governmental or public agencies; or
  • employers engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises.

If you fall within one of these broad categories, then a written notice must be delivered to every employee, full-time and part-time, regardless of whether or not they are provided with health benefits. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan, but who are not employees.

How to give notice. Employers can comply with the requirement by choosing from a number of options for distributing the notices.

These include:

  • sending the notice by First-Class U.S. Mail;
  • emailing the notice if all employees have a company email address and if the Department of Labor
  • electronic safe harbor is met2;
  • attaching the notice to the paychecks of all employees; or
  • personally distributing the notice to all employees.

The notification is required to contain certain information, which will vary depending on whether or not the employer offers health benefits.

  • Since the deadline has already passed, the notice should inform employees that the Exchange went into effect October 1, 2013, and you can include a description of the services provided by the Exchange, as well as the manner in which the employee may contact the Exchange to request assistance.
  • The notice should contain an explanation of whether employees will receive at least 60% coverage of essential health benefits through the employer-provided coverage (if applicable), and whether employees will be eligible for a premium tax credit if they purchase a plan through the Exchange.
  • Employers will be asked to provide certain information about themselves, including a contact person and Employer Identification Number (EIN), for employees to use if they decide to complete an application for coverage on the exchange.

Employees who purchase a qualified health plan through the Exchange will also need to be informed that they may lose the employer contribution to a health plan offered by the employer.

Lesson Learned. The intricacies and politics behind the Affordable Care Act are too vast to address here. What remains important is that, as a business in the construction industry with employees, you must comply with the various notice laws under the Fair Labor Standards Act and other statutes. Even without the risk of the imposition of a fine or penalty for lack of compliance, you should make an effort to notify your current and future employees of their rights to access the Exchanges. You must stay informed of your rights and obligations so that you can make the best risk management and business decisions for your company.

229 CFR 2520.104b-1(c)

About the Authors: Matt is a member of the Construction Service Group and Ozair is a member of the Health Care Service Group of Stites & Harbison, PLLC. Matt lives in Nashville and is the founder of www.bestpracticesconstructionlaw.com. Ozair lives in Louisville and frequently writes on health care issues. You can reach the authors at mdevries@stites.com and


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