The Affordable Care Act (ACA) requires employers across all segments to provide their employees with a written notice of the existence of public health insurance exchanges (also known as the Marketplace) and eligibility for premium tax credits or cost sharing (if applicable for employer’s plan), regardless of whether the exchange is operated by the state or the federal government.

These notices must:

• Inform employees of the existence of state health care marketplaces
• Explain what services will be provided
• Explain how the employee may contact the marketplaces to request assistance
• Detail how employees may be eligible for a premium tax credit or cost-sharing reduction if the employer’s plan does not meet certain requirements
• Explain that the employee may lose employer contributions for health care benefits if he/she enrolls in the marketplace, and that all or some portion of such a contribution may be excludable from income for federal income tax purposes

The Department of Labor has created notice templates for employers who provide health benefits as well as templates for employers that do not. All employers, regardless of their size, must distribute these by October 1. You may wish to speak with your own legal counsel when considering whether to use the model notices provided.

Victoria McCoy of Crown Benefits, who will conduct a workshop for Whalen clients on the health insurance exchanges on September 26, notes that questions within the model notice ask employers to indicate if their plans meet the minimum value standard. If your plan does not meet the minimum value standard, your employees may be able to get the tax credit by buying health insurance on the federal or state exchange.

She points out that a health plan meets the ACA’s minimum value standard if it pays for at least 60 percent of each covered employee’s health care costs.

Employers can make this determination by using the Minimum Value calculator available on the Center for Consumer Information and Insurance Oversight (CCIIO) website.

The IRS recently issued guidance on the tax credit available to certain small employers that offer health insurance coverage to employees.

Section 45R(a) provides for a health insurance tax credit in the case of an eligible small employer for any taxable year in the credit period. The regulations define an eligible small employer as:

• An employer with no more than 25 full-time employees for the taxable year
• Whose employees have average annual wages of less than $50,000 per FTE (as adjusted for inflation for years after Dec. 31, 2013)
• Having a qualifying arrangement in effect that requires the employer to pay a uniform percentage (not less than 50 percent) of the premium cost of a qualified health plan offered by the employer through a Small Business Health Options Program – or SHOP – Exchange.

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