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National Restaurant Association - Plan now for health care law, experts say

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Plan now for health care law, experts say

Restaurateurs need to begin preparing to implement the health care law's requirements for employers even though key regulatory guidance is still missing and legislative changes may be necessary, the National Restaurant Association's labor and workforce team told NRA members in a July 19 webinar.

In a one-hour session, the NRA's Angelo Amador and Michelle Neblett walked operators though the broad requirements of the Patient Protection and Affordable Care Act. They discussed PPACA's employer mandate, which will require businesses with 50 or more full-time-equivalent employees to offer health benefits to full-time employees and their dependents or face potential penalties. They also talked about new reporting rules that expand the information that businesses will be required to provide to the Internal Revenue Service and employees.

Neblett, the NRA's senior director of labor and workforce policy, suggested that restaurateurs stay on top of new regulations, delve into their workforce demographics to understand what parts of the law affect them, talk to their insurers about possible changes in benefit-plan design, and think about how to communicate with employees about the law. "This law will raise lots of questions, and many employees will be turning to their employers for general questions about health care coverage," Neblett noted.

One huge challenge: Federal agencies have not yet released final guidance on any of the key topics for employers. "There are a lot of proposals about the direction agencies may take in regulations, but none of it is final," said Amador, vice president, labor and workforce policy. "This makes it hard to plan ahead."

Amador also said Congress is likely to make changes in the law. Most Capitol Hill observers say legislative changes are unlikely to happen before the 113th Congress convenes in January.

Among the topics covered in the webinar:

-- Who is covered by the employer mandate? The law's employer mandate applies to businesses with 50 or more full-time-equivalent employees. For restaurateurs who operate several businesses, the IRS's "common control" clause will determine whether a business must consider all of their employees in one group or could consider them separately, Neblett noted, and advised operators to talk to their tax advisors for more information. She included several sample calculations to show how businesses would measure whether they meet the threshold and would thus be subject to the employer mandate. This involves counting the number of full-time employees as well as the hours worked by part-time employees.

-- Who's considered a full-time employee? The law requires businesses covered by the mandate to offer health plans to full-time employees and their dependents, but the government has not yet spelled out the definition of "full time." The law states that a full-time employee is a person who works 30 hours per week on average in any given month. To implement that part of the law, the Treasury Department has proposed defining a full-time employee as an individual who works 130 hours in a calendar month. The agency has suggested that employers can use a three- to 12-month "lookback" period to see if existing employees who work variable hours meet the definition of full-time. However, the regulatory guidance isn't set in stone yet, Neblett noted.

-- What type of health-benefit plans must be offered? PPACA requires employers covered by the mandate to offer full-time employees "affordable" health plans that meet a "minimum value" standard. These definitions are also pending, Neblett says. The law considers a plan "affordable" if full-time employees are not required to spend more than 9.5 percent of their household income on monthly premiums. However, the Treasury Department recognized in preliminary guidance that employers won't know -- and won't necessarily want to know -- an employee's household income. The agency has suggested that an employer could instead use an employee's W-2 wages to determine affordability. That issue has not yet been resolved. Similarly, the Health and Human Services Department has proposed multiple ways employers and their insurers can determine whether a plan meets the law's "minimum value" standard, but is still working through the details.

-- New reporting requirements. New reporting requirements will be a significant concern for employers, Neblett noted. Employers subject to the employer mandate will be required to report to the IRS by Jan. 31 of each year detailed information about the plans they offer, and to whom. Insurers and self-funded plans must submit a second, somewhat duplicative, report by the same time each year. Both reports must also be given to employees included in the report.

The law also now requires employers who file 250 or more W-2s for tax year 2012 to include the value of health care premiums (both the employer and employee's share) on these W-2s. The data is for informational purposes only; employees will not be taxed on the value. The new reporting requirement expands to cover all employers for tax year 2013.

PPACA also will require employers to provide written notice to all employees after March 1, 2013, about the state-based "exchanges" that are expected to become a primary marketplace for individuals and small businesses to buy insurance.

The NRA continues to file numerous comments with federal agencies to try to mitigate the regulatory impact on restaurateurs if the law stands.

NRA members can access the full webinar here, and NRA members can get full details on the law in the Health Care Knowledge Center.

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