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Affordable Care Act Notices Due Oct 1st or Pay Penalties - Houston Business CPA

Beginning October 1st, all employers will be required to provide informational notices to all employees regarding the health insurance marketplaces (formerly known as Exchanges) created under the Affordable Care Act. This applies to all employers covered under the Fair Labor Standards Act, who have 1+ employees, and at least $500,000 in annual revenue. The penalties associated with non compliance can potentially be very steep and they are enforced by the IRS.

Who Needs to Receive This Notice?
The notice must be provided to all current employees by October 1st and going forward, all new employees within the first 14 days of employment. This applies to full-time and part-time employees.

What Does the Notice Need to Contain?
You must inform employees of the existence of the marketplaces, including what services are provided and how employees can contact the marketplaces for assistance. You must inform the employee that they may be eligible for a credit on their insurance premiums if you do not provide health care coverage and the employee purchases a health plan through the marketplace. The notice must also inform the employee that they may lose any employer contribution to an employer-sponsored health benefits plan if the employee purchases a health plan through the marketplace and that the employer contribution may be fully or partially excludable from income for federal income tax purposes.

The Department of Labor has created model notices you can pass out to employees or use as a starting point for creating your own. There are two different model notices available on their website; one for employers who do offer health insurance and one for employers who do not.

How Do I Distribute the Notice?
You must distribute the Marketplace Notice in a manner designed to actually reach each individual employee. This can include delivery by direct in-hand distribution to employees, first class mail or email.

What Are the Penalties of Not Providing this Notice?
There is no specific penalty tied to this provision but there is a general noncompliance excise tax penalty in the ACA of $100 a day for each responsible entity, for each individual affected by the violation. In addition to Affordable Care Act penalties, there could be penalties under the Fair Labor Standards Act.

Other Little-Known Provisions in the ACA:

  • Transitional Reinsurance Program Assessment Fee - Employers will have to pay a $63 fee for each person they insure starting in 2014. This fee is intended to create a fund for insurance companies to offset the cost of covering people with preexisting conditions. It will phase out in 3 years.
  • Employers with 50 or more employees must provide an appropriate place (other than a bathroom) for nursing mothers to express breast milk, which is shielded from view and free from intrusion by other co-workers or the general public.
  • Insurance companies must use 12 point font size or greater. This specification is part of a section intended to ensure that customers can read and understand the documents sent by insurance companies
  • Restaurant chains with 20 or more locations must list the calorie content of their food on their menus - including drive thru menu boards.
  • Protection of Second Amendment Gun Rights (page 19) - This provision says the government cannot use doctors and insurers to collect any information relating to the lawful ownership or possession of a firearm or ammunition. There is also a provision stating that insurers cannot increase premiums or deny coverage to those owning firearms. Individuals also do not have to disclose owning a firearm or ammunition to doctors or insurance companies.

Unintended Consequences
The IRS is tasked with collection of taxes and penalties related to the ACA. However, the House of Representatives is refusing to increase the funding the IRS needs to effectively do the job. In fact, with sequestration, the IRS budget has been cut 10%. From a CPA's stand point, dealing with the IRS is more difficult. It takes almost two hours to get someone on the phone to discuss client issues. We have also called the IRS and reach a recording that says the wait is more than 30 minutes, call back at another time, then we are disconnected.

Like most big organizations, most IRS people are quite friendly and want to do a good job. These people are frustrated about the long wait times and their 10% pay cut, but they are caught in a political standoff and so are you, the customer of the IRS. Expect long wait times and higher fees from your CPA when resolving tax issues for you. It is all related to the ACA and the continuing political battle.

IRS Changes Filing Deadlines for W-2 & 1099 Forms

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