Even though the Affordable Health Care Act does not technically begin until January 2014 – you are probably already behind on some required planning and administration issues. The Act is going to require all restaurant operators to know more about health care and the administration of the program than they ever wanted to know. This is extremely important as you are about to be bombarded with a lot of “insurance” types telling you how to handle this issue and with a lot of companies giving you bad advice. Try to remember that your insurance supplier is in the business of making money and their favorite tactic is taking advantage of your lack of knowledge and fear of the unknown – remember when they all started selling “terrorist coverage”?
There is certain information that you will have to start gathering in order to answer all the questions regarding your coverage – this information should be compiled as soon as possible from your 2011/2012 operating years. A list of what is needed is stated below:
Define your employees.
Employers who have more than 50 full-time equivalent employees (who works more than 30 hours per week) will be required to offer “minimum essential” health insurance to employees or will face non-compliance penalties.
Calculation for 50 FTE employees is as follows:
a) Full-time employees (more than 30 hours per week), plus
b) Part-time employees (less than 30 hours per week). Part-time employees convert to a full-time equivalent by the following formula – their hours worked per month/120 hours = FTE.
c) Seasonal employees that work less than 120 days per year are exempt from the calculation – make sure your insurance carrier is not including these employees in your calculation – we have already seen insurance carriers trying to do this.
Calculate your averages.
a) Average the monthly number of employees (by month) for 2011 and 2012. Include any employees that received a W-2 in 2011 and 2012 – regardless of whether they were part of your insured group. Determine your average number of employees by adding your monthly totals of employees together and then dividing the total by 12 months. Round up or down to the nearest whole number.
b) Include all full-time (more than 30 hours per week) and part-time (less than 30 hours per week). Categorize the employees by these definitions.
c) Do not include anyone who retired in 2011 or 2012.
d) Do not include anyone who received a 1099 in 2011 or 2012
Set up your measuring periods.
a) These should be defined and included in your employee manual and new hire paperwork so employees are aware of these timelines.
b) The IRS Safe Harbor guidance addresses “Measurement Periods” (look back periods for counting hours) and “Stability Periods” (periods when employees must be treated as full-time if they meet the definition during the measurement period – i.e. no changes to their status as insured).
c) Look-back measurement periods can be from three (3) to twelve (12) months.
d) Employers can take up to 90 days between measurements and stability period to facilitate enrollment of employees into the health plan.
e) Your CPA should be able to guide you through these compliance issues; as these are IRS Tax compliance issues. If you need assistance with these set-up issues please contact us.
Author: Jean Hagan