How will "Obama-care" affect independent productions? Assuming the production has over 50 employees will we need to provide health insurance?
Answer by Brandon Blake, Entertainment Lawyer:
The Patient Protection and Affordable Care Act (PPACA), better known to its supporters as the Affordable Care Act, or to its critics as Obamacare, will have substantial impact on film, television and music production companies, although a number of the requirements have been delayed. In addressing the Affordable Care Act (ACA) requirements, I will prioritize the information based on the schedule of provisions that are coming into effect the soonest. Like other recent legislation, there may well be provisions of the ACA that never come into effect, but there are certain requirements that are starting next month.
Starting October 1, 2013 all employers, large and small, had to begin providing ACA required disclosures. A lot of producers are not aware that even if the bulk of the ACA does not apply to smaller production companies with less than 50 employees, the disclosure requirements will apply to almost all film, television, and music production companies.
The ACA disclosure requirements apply to all employers that are subject to the Fair Labor Standards Act (FLSA). In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. There are certain exceptions, including an annual dollar volume of business, but given the broad scope of the Act it makes sense for all small production companies to provide the required disclosures.
These notices fall into the following categories:
Exchange Notices – Almost all employers will have to begin providing notices to staff regarding the existence of ACA health insurance exchanges, called the “Marketplace”, and included in this disclosure will be information about whether or not the employer is providing health insurance, whether it qualifies as the minimum health care coverage required by ACA, and how the staff member can get insurance if the employer is not providing coverage. This applies to existing staff and new hires.
Revised COBRA Notice – The Department of Labor has provided for an updated model election notice under COBRA to inform qualified beneficiaries of coverage options through the ACA exchanges.
SBC Notice – A Summary of Benefits and Coverage (SBC) is now required annually. The point of the SBC form is to make it easy for employees and their family members to compare different plans so they can choose between them. This applies to employers who are providing group health insurance coverage.
W-2 Notice – The W-2 must include the cost of coverage for employees, but an exception to the requirement is in place for employers with fewer than 250 W-2s in the prior year. However, look for this exemption to go away at some point.
So, in other words, even when a producer hires staff on a temporary, part-time, or independent contractor status basis, the producer should begin to routinely provide ACA notices to staff in their engagement contracts or face tax and legal penalties.
Starting January 1, 2014, the Marketplace health care exchanges took effect. Enrollment began October 1st 2013. These are the health insurance exchanges that are being set up in various states.
Starting January 1, 2014, the individual mandate became effective, requiring all legal residents of the United States to obtain health insurance or face a tax penalty. This is especially important to many film, television and music production companies because often these are companies of one person, and so-called “self-employed” people will need to obtain coverage for themselves and their family or face a tax penalty.
Starting January 2015, the employer mandate began. This is the centerpiece of the legislation, which requires employers with 50 or more full-time-equivalent employees who have not met the ACA’s minimum health care coverage and affordability guidelines to pay “shared responsibility” payments (tax penalties).
Starting January 2015, the 6055 and 6056 notice requirements begin. These are the IRS notice requirements set out by the Internal Revenue Code (Title 26) – Section 6055 and Section 6056. This part of the ACA has also been delayed along with the employer mandate until 2015. These IRS reporting requirements are currently envisioned to be required both of large and small employers and by the self-employed.
So as the Affordable Care Act timeline shows, there are a number of things to begin doing this month for existing and new hires. Our firm has been handling employment agreements and production legal for film, television and music clients for more than 16 years. Feel free to contact BLAKE & WANG P.A. (www.blakewang.com) for a quote for affordable, high quality legal service.
NOTE: This timeline is not a comprehensive outline of all ACA requirements. Because of the changing nature of the ACA and potential amendments in the future, a complete summary of the Patient Protection and Affordable Care Act is beyond the scope of this newsletter.