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Healthcare FAQs for Restaurants

April 30, 2013

Below you will find an FAQ session that will help update you on the health care mandate. We would like to continue with frequent updates based on what you need and want to know. So please, send us your questions for the next FAQ session to betsy@ramw.org:

 

Health Care FAQ's For Restaurants

 

Q. Will all restaurants have to offer health benefits to their employees?


A. No, it depends on how many full time employees you have. If you have fewer than 50 full time employees, working 30 hours or more per week on average, you are considered a small employer and exempt from penalties if you do not offer health benefits. However, if you also employ part timers you must factor in their hours to determine your Full Time Equivalent number of employees. If the total average number of hours your part timers work in a week is more than 30 hours you need to add one employee to your full time total, if it’s more than 60 add two and so on.   

If, then, you have 50 or more employees you risk penalties if you do not offer all of your full time employees health care benefits.

 

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Q. What are my options for offering health care to my employees?


A. Your options are:

  1. Work with your insurance provider to ensure that your current plan is compliant.
  2. If you do not have a plan now is the time to reach out to an insurance provider.
  3. Or, if you decide not to offer coverage for your employees you must understand that there are potential risks of significant penalties that may be assessed.

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Q. Am I OK with the insurance I have now?


A. Possibly. If your plan meets the “minimum essential coverage” which is a standard based on a minimum of coverage and affordability and your plan has not changed since 2010 you could be “grandfathered” and continue with your current plan. However, the best advice in this situation is to consult with your insurance representative to understand your individual situation.

 

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Q. I have restaurants in DC, Virginia and Maryland. Is each restaurant considered a separate business?


A. Not necessarily. A single employer is defined by the IRS “common control” clause in the tax code [IRC Sections 414 (b), (c), (m), (o)]. Consult with your tax advisor to confirm your filing status. So, if you have “common control” over all your restaurants, regardless of jurisdiction, you would need to plan as if the group were a single entity.
 

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Q. My restaurants are under common control, but may I pick and choose where I buy insurance for each restaurant?


A. No, the insurance is bought where the group is headquartered. However, if an employee opts out and goes into an exchange they buy from the exchange based on where they live.

 

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Q. If my plan isn’t grandfathered do I have to change on January 1, 2014?


A. Not necessarily. You may be able to delay enrollment in a new plan until your plan year ends if:

  1. Your current plan covered at least a 1/4 of your eligible full-time employees
  2. Or coverage was offered to 1/3 of your eligible full-time employees.

 

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Q. What is the “minimum essential coverage” required?


A. According to regulations issued in February 2013, minimum essential coverage includes:

  • Coverage under certain government-sponsored plans (i.e., Medicare, Medicaid, etc.)
  • Employer-sponsored plans, with respect to any employee
  • Plans in the individual market,
  • Grandfathered health plans; and
  • Any other health benefits coverage, such as a state health benefits risk pool, as recognized by the HHS Secretary.

 

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Q. Is there something I need to do now to prepare for the January 1 deadline?


A. Absolutely. You need to determine and document which of your employees are eligible for coverage. To do this you must:

  1. This is a complicated process and we strongly urge you to partner with your payroll service provider and/or accountant to ensure compliance with the requirements.
  2. Perform a Standard Measurement Period of between 3 and 12 months. The initial SMPmust begin no later than July 1, 2013.
  3. After the SMP has been performed you have an Administrative Period of 90 days during whcih you notify your employees of their eligibility - this initial 90 day period must begin no later than October 1, 2013, the beginning of open enrollment, to ensure enrollment by January 1, 2014

 

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Q. What is it that the law requires me to tell my eligible employees – and when?


A.   On March 1, 2013, the US Department of Labor was to have supplied employers with an information kit to guide you through the process of informing your employees of upcoming health care benefit changes, plan options and more. Unfortunately, USDoL was unable to meet that deadline and has pushed it back to the Fall of 2013. This does not mean that you shouldn’t be talking to your employees about health care. On the contrary, talking to them now about what we do know and getting an idea from them whether they plan on opting in to your restaurant’s plan will help you budget for the transition.


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Q. What will I need to do, if anything, if an employee does not want to participate in the plan I offer?


A. Again, until the US Department of Labor catches up to their own deadlines, we do not know the exact form that their information kit will take. There will, however, be documentation forms and procedures to ensure that you have done what is required and that the employee knows what is required of them.
 

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Q. Are there penalties for not offering health benefits?


A. Yes. An employer would face penalties if at least one employee receives subsidized coverage through the premium tax credit on the exchanges. Also, if an employer offers coverage to full-time employees but it is "unaffordable" for some, the employer may be subject to penalties.

 

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Q. Why wouldn’t an employee sign on to my plan if they would otherwise have to buy coverage as an individual?


A. Just as your business could be subject to penalties for not offering a health benefit plan to your employees, the individual employee could be penalized for not enrolling in any plan when they file their taxes. However, the penalty for the first year, 2014, will only be $95 which may be less than what they would have to contribute if they were to participate with your plan or buy a plan on a Health Benefit Exchange. The penalty does increase to $325 in 2015 and then $695 in 2016, so you may see additional waves of employees deciding to opt in to your plan down the road – keep this in mind as you budget for the coming years.

 

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Q.  What is a Health Benefit Exchange?

A. The federal health care law requires each state (including D.C.) to have an insurance exchange in place by 2014. An exchange is an on-line market where individuals and businesses can shop for health coverage, compare policy options, determine if they are eligible for tax credit assistance, and choose and purchase coverage for themselves and for their employees. In 2014, exchanges are available to individuals without large-group coverage as well as small businesses (up to 50 FTEs). In 2016, that expands to businesses with up to 100 FTEs. Small employers who choose to offer health coverage to their workforce can go to an exchange and choose coverage for their employees. Employers can also choose an array of options for their workers to consider.

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Q. How much can I ask my employees to pay for participation in my restaurant’s health benefit plan?

A. There are standards to keep in mind here when figuring out participation – the second of which is a little tricky.

  1. First, you must cover at least 60% of the actuarial cost of the minimum affordable plan for all employees (estimated at the cost of premiums plus the average estimated cost of out of pocket expenses).
  2. Second, your employees may not be asked to pay more than 9.5% of their individual income, based on their W-2 reported wages, to participate in the lowest level plan. Note however, that even if you know that an employee is working a second job, qualifying him/her for your restaurant’s plan is based solely on the W-2 generated by your restaurants.

There is a tremendous amount of information that you need to know and still more to be released by the Federal Government. We will do our best to update you but we strongly encourage you to work closely with your insurance representative and your payroll service provider. Following are additional resources and contacts for health care information.

 

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RAMW Endorsed Providers Are here to help

USI INSURANCE  

Holly Miller
Direct Line: (703) 205-8715
Toll Free:    (800) 792-9800
E-Mail: holly.miller@usi.biz


Download the Webinar Slides from USI

PAYCE Payroll Service

Brian Pfeifer
(443) 279-9000
bpfeifer@paycepayroll.com

 

General information on the Affordable Care Act and its impact on restaurants visit the National Restaurant Association Health Care site and Health Care: Next steps for Restaurateurs.

DC Health Care Exchange Authority

Maryland Health Care Reform

Virginia Health Reform Initiative