Small businesses unaware of health coverage notification rule

Small business owner, make this note to self: “I will notify my employees of their options for health coverage under the Patient Protection and Affordable Care Act.”

Numerous studies suggest that employers are far behind in getting the required notice about state health insurance exchanges, in writing, to employees by Oct. 1.

Particularly at risk are small businesses. Employers with few than 50 full-time workers will not be required to offer health coverage to their workforce. But, they are still required under the PPACA to inform their employees about the existence of state health exchanges.

Many small businesses are unaware of this obligation, benefits consultants are reporting. With the Oct. 1 deadline quickly approaching, these companies need to get the word out if they want to avoid paying a fine of $100 per worker per day.

The idea is simple: The act’s intent is to make sure most Americans have some type of health insurance. Workplaces are a logical place for people to learn more about health coverage. So, although the act is giving small biz a pass on providing coverage, it is still telling them they have to participate in the health coverage initiative.

Pershing Yoakley & Associates, advisors to businesses, posted an explanation for small businesses about compliance with the notification clause. PYA said:

“The notice must be provided in writing and designed so that an average employee can understand it. The communication must include information regarding the existence of a new (insurance) marketplace, as well as contact information and a description of the services provided by the marketplace.

“In addition, the notice must: (1) inform the employee that he or she may be eligible for a premium tax credit if the employee purchases a qualified health plan (“QHP”) through the marketplace; and (2) include a statement informing the employee that if he or she purchases a QHP, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer, and that all or a portion of that contribution may be excludable from income for federal income tax purposes."

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