We are a few years into the Affordable Care Act now, but that hasn’t necessarily lessened the confusion. Obamacare continues to effect the restaurant industry and our employees, and it is crucial that you have a sound understanding of what healthcare looks like for restaurant workers.
The big question for the standard restaurant operator is “Do you have at least 50 full time equivalent employees?”? Well, what is an equivalent employee:
While full-time employees are defined for this purpose as those who are employed on average at least 30 hours per week, the ACA does not allow employers to escape liability by only hiring part-time employees. Part-time employees are treated as FTEs by adding up the total amount of hours worked by part-timers in a month and dividing by 120. Put another way, if five part-time employees each work 104 hours in a month, they will be treated as four FTEs for purposes of determining whether an employer is subject to the ACA's coverage requirements.
Do not worry if this calculation exceeds 50 as there is another threshold that must be met prior to being required to offer health insurance or paying penalties. You will then calculate if you have 30 or more employees who work on average more than 30 hours per week. If you meet this threshold, then you will be required to provide health care or face rather large fines.
If you are required to provide health insurance, there are a number of tax incentives offered during the first few years of the law being fully in place. This needs to be carefully reviewed by your tax accountant or benefits administrator.
Providing healthcare for your employees will drastically affect your cost structure and you’re pricing on your menus. You will also to make sure your staff is aware of the penalties they will need to pay if you do not provide health care and they do not purchase it on their own. Penalties will reach $695 by 2016 if they do not purchase insurance.
You are not out of the woods yet. Reporting requirements will be going up significantly. When Obamacare was passed, the IRS issued 179 new regulations to be followed as part of the new law going into effect. Do not kid yourself, there will be costs that you will need to deal with.
There is a misconception that if I separate all my businesses, I can sneak under the radar and will not fall under the ACA net. Unfortunately, this is not the case. To calculate your 50 equivalent employees, you must include the employees for all the businesses you own into one bucket.
Please do not hesitate to contact us for help and direction in dealing with this very important issue. We can help. It does not matter what state or city you are in, our restaurant consultants are experts in the industry and well-versed with ACA as it applies to restaurants and their employees.