In an environment where many employees are part-time or seasonal and turnover rates are high, quick-service restaurant employers often find it difficult to identify their obligations under the Affordable Care Act’s (ACA) employer mandate. Under the mandate, employers with 50 or more full-time equivalent employees (Applicable Large Employers, or ALEs), are required to offer minimum essential healthcare coverage to at least 95 percent of their full-time work force and their dependents.
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“Many quick-service restaurant owners don’t realize that they meet the threshold to be deemed an ALE, which makes them subject to the employer mandate penalties,” says Joanna Kim-Brunetti, vice president for regulatory affairs at First Capitol Consulting.
It is important for employers to regularly assess their workforce and identify those workers who are entitled to coverage under the law. Otherwise, Kim-Brunetti says, “money is going to be paid in government penalties that could otherwise be used to reinvest in and expand a business. One restaurant chain was assessed an ACA penalty of more than $20 million by the IRS.”
So how can your business ensure compliance with ACA guidelines? Kim-Brunetti says there are five ways:
1. Know this: A full-time employee, according to the ACA, is anyone who provides more than 30 hours weekly, or 130 hours monthly, to a business. Full-time does NOT mean salaried or working 40 hours per week.
2. Understand this: Aggregated groups between or among business entities may constitute an ALE, according to ACA employer aggregation rules.
3. Do this: Employers must make offers of healthcare coverage to eligible employees within strictly defined periods.
4. Remember this: Offers of healthcare coverage must be affordable for all full-time employees. Affordable is generally defined as not exceeding 9.5 percent of the individual’s household income.
5. Work on this: Organized payroll and benefits records are essential to ACA compliance. Errors in data-keeping can result in costly penalties for business owners.
“Inaccuracy of data and lack of documentation in providing ACA information to the annual IRS filings are how many quick-service restaurant owners end up being penalized,” Kim-Brunetti says. “Many owners don’t realize they meet the threshold to be deemed an ALE, which makes them subject to the employer mandate and the related penalties for non-compliance.”
If you have questions about whether your restaurant is subject to the ACA’s employer mandate for employee healthcare coverage, be sure to join QSR and First Capitol Consulting this Tuesday, October 30 at 2:00 p.m. Eastern for a webinar. ACA experts will weigh in on how to avoid fines from the IRS and offer tips on evaluating your company for compliance risks.
