Industry News | November 17, 2011

NRA Defends Against Health Care Regulations to IRS

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In testimony before Internal Revenue Service (IRS) officials today, National Restaurant Association director of labor and workforce policy Michelle Reinke Neblett described the significant challenges the restaurant industry faces under proposed health care regulations related to employer health plans.

“The restaurant industry is the nation’s second largest private industry employer, providing jobs to nearly 13 million people,” Neblett said during the public hearing. “We are an industry dominated by small businesses, and an employer of choice for workers seeking flexible work schedules, with a high proportion of part-time, seasonal, and temporary workers. Our workforce is typically young and we experience a high average turnover rate relative to other industries. These characteristics result in a workforce that can be fluid, presenting unique compliance challenges for the industry. Throughout the implementation of the new health care law, we urge Administration officials to consider the collective impact of employer regulations from the perspective of restaurateurs who are trying to offer quality health care coverage that is affordable and useful to their employees and also affordable to them as an employer.”

Today’s hearing focused on proposed rules related to determining an employer health plan’s “affordability” to an employee and the plan’s “minimum value.” The new health care law requires large employers (those with 50 or more full-time equivalent workers) to offer minimum essential coverage to their full-time employees and dependents that is both affordable and of minimum value or be subject to potential penalties.

“Since the law passed, restaurateurs have asked how they should comply with an affordability test based on the household income of their employees—information they do not know and do not wish to know for privacy reasons,” Neblett said. “The National Restaurant Association believes the affordability test based on household income is flawed and suggests the option of evaluating affordability based on W-2 wages. In addition, other elements should be taken into account when factoring affordability, such as the prohibition on annual and lifetime limits and no cost-sharing for preventive services, as well as employer contributions to wellness programs and to Health Savings Accounts.

“Moreover, a restaurateur’s ability to meet the affordability test depends heavily on the rules that will be written to meet the minimum value standard under minimum essential coverage. The total effect of the affordability test and minimum value test under minimum essential coverage must be considered carefully in the context of what an employer like a restaurateur with a low-margin business is able to afford and offer employees.”

The National Restaurant Association has played an active role throughout the regulatory process, most recently filing comments on October 31 with the IRS and the Department of Health and Human Services on issues related to employer health plans.

The National Restaurant Association is a leading member of the Employers for Flexibility in Health Care (EFHC) coalition, a group of leading trade associations and businesses in the retail, restaurant, hospitality, construction, temporary staffing, and other service-related industries, as well as employer-sponsored plans insuring millions. EFHC Coalition members are dedicated to the common goal of advocating for solutions for both large and small employers and are working to help ensure that employer-sponsored coverage—the backbone of the U.S. health care system—remains a competitive and affordable option for employers and for employees whether full-time, part-time, temporary, or seasonal workers. 

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