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Helping You Mitigate Health Care Mandates

The majority of restaurant owners consider the Patient Protection and Affordable Care Act as an inflexible “pay or play” proposition that will burden them with unwelcome costs, regardless of the decision made.

However, some experts maintain health care reform offers operators the opportunity to create individualized plans that can help offset some of the law’s anticipated expenses. As the law currently stands, by 2014 businesses with 50 or more full-time employees can opt to either “play” by offering affordable health care insurance to each qualifying worker, or “pay” a penalty of $2,000 each. An individual must work 30 hours per week or 130 hours per month to be classified as a full-time employee.

Under the law, if an employer chooses to pay the penalty, the first 30 full-time employees are considered exempt. Deciding to offer no coverage is a means that operators will incur penalty expenses. However, operators who decide to pay a $2,000 annual nondeductible penalty for each full time employee will spend an average of 70 percent more than current health care costs.

There are some adjustments restaurant owners can make to help address higher costs. One option is to reallocate labor and hours. Operators could reward their best performers by scheduling them to work more than 30 hours, allowing them to be eligible for the health care benefits. At the same time, marginal performers can be downgraded to a part-time status of 28 or 29 hours a week, disqualifying them from receiving benefits.

The law is expected to provide foodservice operators with an initial 90-day “free pass” during which time they will not be required to provide health insurance to new full-time employees or to pay the penalty. Given the industry’s high turnover rate, this will lower costs and ease the operational burden of insuring employees who may not stay with the company long term.

In addition, the law allows employers to examine the work history of veteran employees in a “look-back period” that can extend up to 12 months to determine whether the employees average a minimum of 30 hours per week or 130 hours per month. This helps operators to better manage how many full-time workers they employ and insure.

In addition, businesses are allowed to implement outcome-based wellness programs, designed specifically to help an employer better manage the risk associated with the overall health of employees, decrease absences and mitigate costs associated with health care coverage. For example, if a medical exam or health screening reveals that an individual has an unhealthy cholesterol level, the employee would be notified and given a designated period of time to address the problem. If the problem is not corrected, a surcharge of up to 20 percent can be added legally to the amount of the premium that employee must pay. Similarly, such practices such as tobacco use can boost the surcharge to as high as 50 percent.

These surcharges could potentially increase the price of coverage beyond what an employee is willing to pay, thus persuading the individual to purchase insurance with a lesser cost. Employers may be penalized for this, depending on the scenario.

Ultimately, the health care changes will affect restaurant owners, but is not entirely negative, providing the opportunity to create individualized plans that can help offset some of the law’s expenses.

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