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National Restaurant Association - NRA board vice chairman testifies on health care law

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NRA board vice chairman testifies on health care law

The 2010 health care law presents numerous challenges for business owners and could lead to fewer jobs in restaurants in North Carolina and across the country if reforms are not made, National Restaurant Association Board Vice Chairman Ken Conrad told a House panel Tuesday.

Conrad, chairman of Libby Hill Seafood Restaurants in Greensboro, N.C., testified during a hearing of the U.S. House Education and Workforce Committee’s subcommittee on Health, Employment, Labor and Pensions. The hearing, which was held to discuss the health care law’s impact on North Carolina lobs, was hosted by Subcommittee Chairman Phil Roe (R-Tenn.) and Rep. Richard Hudson (R-N.C.).

Three areas of the law are particularly problematic for the restaurant industry, Conrad said: the definition of a full-time employee, the complexity of the “applicable large employer” determination, and the potential harm the automatic-enrollment provision could cause for some employees.

Libby Hill restaurants will have to make adjustments due to the health care law’s definition of a full-time employee as one with an average of 30 hours of service a week in any given month, Conrad said. “We have always used a 40-hour workweek to define who is full-time and part-time within our company, so we will have to make changes based on this law’s new definition of full-time,” he said.

Conrad said that many restaurants operate near the 50 full-time-equivalent employee threshold used to determine whether they are large employers, and that the calculations required to determine whether they meet that definition are complex and costly.  Employers who meet the “applicable large employer” definition must either offer health care plans to full-time employees or face potential penalties.

“My business is on the bubble of being an applicable large employer defined as employing 50 full-time- equivalent employees on business days in a calendar year,” Conrad said. “We must consider the number of full-time employees now based on 30 hours a week, as well as the hours worked by all our other employees. Given we are an industry of small businesses and that restaurants are labor intensive…many small businesses will have to complete this calculation annually to determine their responsibilities under the law.”

The “auto-enroll” provision of the law is also a concern, as it requires businesses with 200 or more full-time employees to automatically enroll full-time employees in a health care plan if those employees do not specifically opt out of coverage, Conrad said. “Despite education and notification, employees may miss the 90-day window to opt out, causing potential confusion and financial hardship. Since the same full-time employees must be offered coverage by the same employers subject to the automatic enrollment provision and the employer mandate provisions, we believe the automatic provision is redundant and should be eliminated.”

Conrad thanked Hudson for his leadership in introducing H.R. 1254, the Auto-Enroll Repeal Act, which would eliminate the health care law’s automatic enrollment requirement.

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