Dear Ministry Leader:
Our office would like to update you on the notice requirements under the Affordable Care Act (“ACA”)(aka Obamacare). The Act requires all businesses that must comply with the Fair Labor Standards Act (“FLSA”) to provide written notice informing all employees of certain insurance options by October 1, 2013. In summary, there are three things churches and ministries need to understand regarding the notice provisions:
- We recommend all churches and ministries provide notice by October 1, 2013;
- Providing notice does not mean a church supports Obamacare; and
- The required notice need only be provided to employees, there is no need to notify the Federal government or any agency thereof of your compliance with the notice requirement.
Please see below a more detailed description of when and how the notice requirement applies.
The notice requirements under the Affordable Care Act are based on whether or not an employer must comply with FLSA. There are no religious or church exemptions from the notice requirement. Whether or not a church falls under FLSA depends on the facts and circumstances of each case. Where a church has no employees that engage in interstate or commercial activities (which many churches and ministries do) and where the church does not receive financial support though any commercial ventures, the church may be exempt from FLSA. FLSA2005-12NA. However, exemption from the minimum wage does not exempt employees of a church’s school or preschool as all schools, religious and otherwise, are explicitly included in FLSA.
Where a church is deemed to be an “enterprise” and subject to the minimum wage laws and where the church is engaged in commercial or business activities with revenue of at least $500,000 the church is under the FLSA. A Wage and Hours Division (“WHD”) Opinion, dated November 4, 1983, states that “[g]enerally, enterprise coverage is not applicable to employees engaged exclusively in the operation of a church or synagogue since their activities are not performed for a ‘business purpose’ within the meaning of FLSA.” However, individual employees may be covered by the FLSA in any workweek in which they are engaged in interstate commerce, the production of goods for commerce, or activities closely related and directly essential to the production of goods for commerce. FLSA2005-12NA. Examples of interstate commerce include making and/or receiving interstate telephone calls, shipping materials to another state, and transporting persons or property to another state. Id.
As a practical matter, the WHD will not assert that an employee who, on isolated occasions, spends an insubstantial amount of time performing individually covered work within the confines of the FLSA. Id.
Under these rules, custodians and cooks would not be covered by FLSA on an individual basis unless the custodian is involved in interstate commerce as described above. Id.
The ACA provides for a general $100 a day fine for violations of the ACA. It was widely believed and reported that the $100 per day fine would be applied to those failing to provide notice to employees. However, as of mid-September 2013, the Department of Labor made it clear that there is as of now no penalty for failing to give notice to an employee according to the United States Department of Labor FAQ on Notice of Coverage Options. See http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html. These penalties are in the law and can be reinstated at any time. Despite the fact that there are currently no penalties for noncompliance, we recommend that all organizations comply with the notice requirements under the Affordable Care Act. To be in compliance is extremely simple and there is no adverse consequences to complying with the requirement. The notice requirement only requires employers to provide written notice to employees of their insurance options, there is no requirement that anything be filed with the Federal government or any of its agencies.
While there are no penalties under federal law at this time, it is possible for employees not receiving notice to sue the church or organization should notice not be appropriately given.
The notice does not give employees any additional rights, does not mean you agree with the Affordable Care Act, does not provide any sort of agreement with the contraception mandate, and does not give up any rights of the church.
The U.S. Department of Labor has posted information about the notification requirement on its website at http://www.dol.gov/ebsa/newsroom/tr13-02.html. The DOL has also provided model notices for employers who offer insurance (http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf) and for those who do not offer insurance (http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf).
Your church or ministry should download the form that fits your personal insurance situation. The model notice forms can be downloaded, filled out, and printed, either for distribution in the office or for mailing to employees’ homes by October 1st. Nothing needs to be done to the first page—the notice page. It contains the information required for the employee notice. If the ministry already offers an insurance plan to its employees, it should use the form for those employers with plans. If the ministry does not offer an insurance plan, it should use the shorter model notice for those businesses without insurance plans.
The second and third pages of the model notices are optional. Gibbs & Associates recommends that the ministry just complete the upper portion of the second page which describes the insurance coverage provided by the company. The employee will need that information if he decides to apply for coverage in the Marketplace, so it will be more convenient for the ministry to provide it with the notice rather than be required to provide it over and over. The ministry may wish to complete one of the upper portions of Part B on page 2 and just copy that completed portion to insert with every employee’s Part A notice.
The DOL has also provided a revised model COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) election notice. Employees and their dependents that become eligible for COBRA coverage are required to be provided a notice explaining that they may elect COBRA coverage. The DOL has revised its model election notice to include an explanation of the availability of the health insurance exchanges. The DOL’s model COBRA election notice can be found on the DOL’s website at: http://www.dol.gov/ebsa/cobra.html.
Please do not ignore the October 1, 2013, deadline for giving your employees the required notice.