URGENT! Healthcare Letters to Employees Due October 1

by Marie Jett, CPA and Brandon Cook, CPA | Members of the Tax Services Group

Employers with 1 employee or more and revenue of at least $500,000 need to remember to issue their health insurance letter to all employees by October 1. The letters will inform employees of the health insurance marketplaces (formally known as exchanges), services provided in the marketplace, potential eligibility for subsidized coverage, marketplace contact information, and if the employee will lose any employer contributions to insurance coverage if purchased in marketplace. These letters should be mailed to all employees even if part-time and even if the employer doesn’t offer any insurance coverage to employees by October 1. The employer will be required to provide this same letter to each new hire hired after October 1. Employers that don’t provide the letter to employees may face a penalty. At this time the amount of penalty is estimated to be $100 per employee per day(*). For an example of a letter you can go to: www.dol.gov/ebsa/healthreform. Go to the “Notice to Employees of Coverage Options” section. You can select from one of two types of notices: “Model notice for employers who offer a health plan to some or all employees” or “Model notice for employers who do not offer a health plan”.

(*) Currently, the Department of Labor website indicates there is not a penalty for employers who do not issue the Healthcare Letter by October 1. However, the requirement to issue the letter is still a Federal law and should be issued to employees. Additionally, even if there isn’t a $100 statutory penalty, there could be a claim under Section 510 of ERISA for employers who disregard the notice requirement.

Health Insurance Survey Results

The AICPA released survey results that show many Americans do not understand common insurance terms. In fact, more than half of those surveyed didn’t understand premium, deductible, or copay. Additionally, 14% said they did not have insurance currently and half of those individuals aren’t sure how they’re even going to pay for the individual insurance mandate.

These survey results, combined with the letter to employees, may create a lot of confusion and questions among your employees, especially as the health insurance marketplace is supposed to be open on October 1 for enrollment.

If you have any questions, please contact us.

Contact Information:

Marie Jett, CPA | Manager, Tax Services Group | 317-260-4472 | mjett@greenwaltcpas.com

Brandon Cook, CPA | Partner, Tax Services Group | 317-260-4437 | bcook@greenwaltcpas.com