Greg Kniss and Jean Hagan of Krost attended the ACA update at the NRA Show in Chicago. The presenters were Michelle Neblett, Director of Labor and Workforce Policy and Randy Spicer, VP of Health and Insurance Services.
As for the ACA, there have been some minor changes on the administrative side but nothing material. There are two delays that have been made:
1) Information Reporting by Employers is delayed until 2015 and
2) Employer Mandate Penalty is delayed until 2015 as well.
The Employer Responsibility Provision will apply to larger restaurants or restaurant groups with 100 or more full-time employees starting in 2015 and employers with 50 or more full time (but less than 100) employees starting in 2016. All the prep work you should be doing should begin right now. If you currently offer insurance to employees at any level, you need to start preparing your process for your look back period and your next open enrollment.
If you don’t currently offer insurance, you are on the clock to prepare for January 1st, 2015. Determining whether you qualify as a large employer (ALE) is the first order of business. Remember that each 30 man-hour period equals one full-time equivalent (FTE) for this calculation. As I have suggested before, you need to find an insurance partner now to help strategize your process. Things are going to get very busy over the next couple of months and making time and scheduling insurance professionals meet with you is going to become more difficult as the deadline gets closer. We have some great insurance professionals in our resource of the professional area of our website.
The shared responsibility payment otherwise referred to as a “Play or Pay” needs to be calculated to determine what your financial exposure will be if you do not comply in January. The issue everyone is going to face is the way insurance companies are dictating participation – I think this is going to be the most difficult piece of this puzzle. Some insurance companies are asking for 70% participation in order to write a plan – that is going to be very difficult to do as a restaurant operator. It is a double edge sword in that, you may choose to be in compliance and want to offer a qualified plan – but you might not be able to find an insurance company to write it if you do not get everyone signed up. The ACA threshold has been lowered in 2015 to offer coverage to at least 70% of your workforce to stay in compliance and not get penalties for non-compliance (it goes up to 95% in 2016) – but that doesn’t mean they are going to take the offer. The insurance industry is forcing restaurants to make a difficult decision by picking up most of the premium in order to get enough participation to get a policy.
The other concern is the reporting requirements and the associated penalties. Again, you need to find the right restaurant intelligence system and payroll provider to get this work done for you otherwise it becomes a giant excel sheet with lots of costly mistakes. There are significant compliance costs associated with not following the reporting regulations. The IRS issued final regulations on reporting back in March of this year. Regulations can be found in Sections 6056 and 6055 of the Internal Revenue Code. The forms for reporting are not yet available. Part of the regulations require: reports certifying that employees have been offered health care through the employer, data on the number of full-time employees each month and the months during which the employees were offered coverage, reports that include the plan offered and information on who the plan is being offered by – health insurers/self insured/etc. The first returns based on 2015 data gathering must be filed by early 2016. Employees must receive their statements by January 31st, 2016 and returns must be filed with the IRS by the end of February (paper) or end of March (electronically).
About the Author
Jean Hagan, Principal
Jean has owned, operated, and consulted in the restaurant industry for more than 30 years. During that time, she worked with a well-known national chain; owned a food and beverage company that operated multiple restaurants, bars, and event spaces in the Squaw Valley area; and became the president, CEO, CFO, and shareholder of one of the highest-grossing restaurants in California. Today, Jean is Principal and leads the Restaurant Operations Consulting practice at KROST. » Full Bio