While the deadline draws near for many small-business owners to send out the ObamaCare employee-notification letter, an Idaho businessman urges employers to use his version of the letter—or write their own.
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The Department of Labor has required that any small business – whether it offers health benefits to employees or not -- with at least one employee and $500,000 in annual revenue must notify all workers by letter about the soon-to-launch health-insurance online marketplaces. The requirement applies to any business regulated by the Fair Labor Standards Act, regardless of size – so even employees at a local pizza parlor and/or food mart must receive the notice. After Oct. 1, any new hires must receive the letter within 14 days of their starting date, according to the DOL.
The DOL has letter templates for employers on its site for those who offer insurance benefits and those who do not. Wayne Hoffman, president of free market think tank Idaho Freedom Foundation, says he decided to write his own letter, instead. He has made his form letter available for download on the Internet.
Hoffman says the DOL letter template is too pro-ObamaCare, and he doesn’t necessarily agree with its wording.
“It extols the virtues of ObamaCare, and this is basically the vehicle to convince people to sign up and not worry about the other possible ramifications of being a government welfare state,” Hoffman says.
Hoffman says the governments’ notification lets workers know that they may be eligible for subsidies, but does not explain fully how these tax credits are being funded. The letters from the DOL states, “you may be eligible for a tax credit that lowers your monthly premium, or a reduction in certain cost-sharing if your employer does not offer coverage to you at all or does not offer coverage that meets certain standards.”
“Who pays for that?” Hoffman says. “It’s being drawn on a Treasury that has no money… someone pays for this, somewhere.”
Hoffman himself does not fall into the territory of businesses that will be impacted by the employer mandate portion of the law, which was rolled back to Jan. 1, 2015. This mandates that every business with at least 50 or more full-time workers must offer their workers acceptable health-care coverage or face a fine of $2,000 per worker, per year. The debate around the mandate has centered on whether small companies will comply and offer this coverage, or opt to pay the penalty instead—or reduce staff levels to stay below the compliance threshold.
The Letter Guidelines
The Department of Labor says employers do not have to send out the government’s sample letter, but that the notice must meet certain criteria in explaining the new law and exchange marketplace.
“Providing model notices to employees will ensure that employers are meeting the requirement. Using the models is not, however, mandatory. Employers can create their own notices as long as the content set forth in the law and explained in Department of Labor guidance is included,” a Labor Department spokesperson stated via e-mail.
The letter must include information on these three points, the DOL says:
- About the Health Insurance Marketplace;
- That, depending on their income and what coverage may be offered by the employer, they may be able to get lower cost private insurance in the Marketplace; and
- That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits
Business Owners’ Responses to the Letter
Hoffman’s notice takes a much different approach. Here are some of its passages:
“It is important to understand that your use of the above subsidies may come at a heavy price to both you and the country. I understand that you must make your own decision concerning your utilization of the exchanges so it is your duty to fully research the act before you make the decision. I will be available to discuss this with you whenever you would like.”
“Understand that our country is trillions of dollars in debt. If you accept tax credits to pay for your health insurance, that bill will have to be paid by this nation's children and grandchildren.”
“Please know that this health care mandate has a direct impact on this company's resources. As such, we will be monitoring the impact of the health care law on our ability to hire, expand or reward our current employees for their hard work.”
Employers who choose to create a notification letter via Hoffman’s site can customize the details they send out to workers. He says he believes many will opt for the government notification because they don’t realize they have other options, and he finds that unfortunate.
“The [DOL] letter has a ‘doe-eyed, don’t worry about it, what can possibly happen?’ tone to it,” he says. “Most folks will resort to the DOL form, but employers still have rights, and that is our point.”
Newtek president and CEO Barry Sloane says he will be sending out notices to his 320 employees across the country, but will have his human resources department craft their own version.
“I think its important to us to have that message to our employees, and to be frank, we are still formulating opinions about what we will do [under the ACA],” Sloane says. “We feel we need to address our employees in our stakeholders’ and shareholders’ best interest, including the staff. The government’s letter does what it does, but we have to address our employees with what we see as what’s happening."
The company currently offers its workers’ health coverage, and while Sloane says it reserves the right to change its mind, it is planning to continue offering these benefits.
“It’s a rapidly changing landscape, and we don’t have quotes yet on existing coverage, but will get them shortly. We plan to stay the course and want our staff to know the world is changing and that our communication will primarily be about our guesses as to what will happen in the marketplace,” he says.
A restaurant owner in Iowa, who asked for anonymity, says he isn’t sending out the letters because he simply doesn’t have time. Some of his 75 workers are full-time, and are offered coverage, and some are not—both need to be separately categorized.
“I don’t have time for an excessive amount of paper work, I am a restaurant owner,” he says. “I don’t plan to send out [an ACA notification letter] since they aren’t penalizing you for not sending it.”
Peter Palumbo has taken an entirely different approach to the letter. The New York-based president of Camelot Limo has actually outsourced all health-care preparations to a third-party company called TASC.
The move will cost him several thousand dollars a year, but the company has an insurance policy in case Camelot misses a deadline, he says.
“The Department of Labor hasn’t sent us anything, but I did get emails from our health insurance broker, and I didn’t know what to send out,” Palumbo says. “Every time I do research, there’s another thing I have to send out.”
He has 60 total workers, 20 of which are full-time and offered health-care.
“Our expenses went up 14% for the exact same plan, and it continues to go up between 10% and 20% a year,” he says. “It’s to the point where a business can’t even afford to offer their employees health care.”