How the Affordable Care Act Affects Restaurant Operators
By: Aprons & Smocks
In late June, the Supreme Court upheld the individual mandate within President Obama’s Affordable Care Act. This means that starting in 2014, most Americans will be required to buy health insurance or pay a penalty. Furthermore, employers who have 50 or more full-time staff members will have to offer health insurance. If this insurance option is not given, these small business owners will also face certain fees.
Although there is still some time before the Affordable Care Act goes into effect and some aspects of the law are not as clear, deadlines still need to be made. So whether you own a big restaurant or a small diner, it’s essential for you to start taking action now. The year 2014 will be here faster than you think.
Workforce Size Is Important
Before you do anything else, determine the amount of employees who work in your restaurant. Also, be sure you analyze your employment records so that you know the number of part-time and full-time workers that you have on the payroll. This is important information because the Affordable Care Act considers people who work more than 30 hours to be full-time employees. So you may have more full-time members on your staff than you originally thought possible.
It’s also very important to understand that even though the new law doesn’t start until 2014, the requirement will be based on your 2013 headcount. Since restaurant staffing can be very fluid, with many people coming and going depending on your needs, it may be a challenge to figure out a firm number of full-time workers. But it is in your best interest to make sure you have an accurate count of staffers that qualify for full-time status as soon as possible so you don’t miss any deadlines.
Your Business Structure May Impact an Exact Headcount
If your restaurant has multiple locations or if you own a chain, think about the business structure. By having partners and investors at separate units, which are located in different areas with each having less than 50 full-time employees, you may be exempt from the law. However, if you do own several restaurants, but your business is not structured into separate entities, you might want to consider offering investors more equity so that there is a distinction between units. Such a move could reduce your employee numbers.
Be Aware of the Benefits You Offer Now
It’s important to review the types of benefits that you currently offer so that you understand what changes you may have to make in the near future. Restricting health insurance to management will not be sufficient anymore. You will have to provide substantial and affordable coverage to all of the full-time workers at your restaurant, if you employ more than 50 staff members.
The argument could be made that the new law’s definition of affordable is not apparent at this time. But that’s why “employer safe harbor” is built into this law. In essence, it means that if an employer can prove that a full-timers portion of the health insurance costs is 9.5 percent or less of W-2 wages, there will not be a penalty. However, if it is concluded that the coverage an employer offers is not affordable, the business will be penalized.
Another detail that should be noted is that the new law does provide a 90-day waiting period before an employer must present coverage options. Since the restaurant industry does have a high turnover of employees, this feature of the health care law is particularly helpful.
Take Action Now
It’s logical to be concerned about the costs of health insurance for full-time employees. But there are things you can do to save money that could be applied to the new health care law in the next few months. Take a close look at the benefits you may currently offer such as vacation pay and educational assistance. You may be able to amend these programs so that you don’t feel stretched so thin once the Affordable Care Act is underway.
Even though there are still some lingering unknowns about how the new law will ultimately work, you should not wait to hear more details. Start seriously thinking about how this law will affect you, your employees and your overall restaurant business now so that you don’t have to suffer any consequences in the future.