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National Restaurant Association - Will House fix ACA’s seasonal employee problem?

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Will House fix ACA’s seasonal employee problem?

A bipartisan group of House members has introduced a bill intended to change one of the many confusing aspects of the Affordable Care Act: its two definitions of “seasonal” employment.

The problem: Restaurant operators who hire seasonal staff face confusing rules under the ACA. That’s partly because the law defines “seasonal worker” and “seasonal employee” differently. One definition helps businesses with seasonal workforces understand whether they’re “applicable large employers” who are subject to the ACA’s employer mandate. The other helps large employers determine which full-time seasonal employees must be offered health care coverage.

It gets complicated: Figuring out whether an employee is full-time under the ACA is tricky, and that’s especially true to for seasonal employees. To help employers figure it out, ACA regulations give large employers the option of using what’s called a “look-back measurement method” to assess the full-time status of any employee who works in a position for which the customary annual employment is six months or less. Because of the way the method works, many seasonal employees are unlikely to qualify as full-time for purposes of health care coverage offers.

But employers use a different seasonal-employment standard to determine if they’re “applicable large employers” under the ACA. Under current law, employers include seasonal workers’ hours of service to determine if the business hits large-employer status (for 2015, this covers employers with 100+ full-time-equivalent employees; for 2016 and beyond, 50+ FTE employees). If it turns out seasonal workers push the employer into large-employer status, the employer may qualify for an exception to the employer mandate. But the calculation is complex and the definition of seasonal worker is vague.

Employers near the 50- or 100-FTE employee threshold are caught in the middle, since they now need to use the seasonal worker definition to run the large-employer calculation and the seasonal employee definition to understand which seasonal staff are eligible for health care coverage offers.

The fix: The “Simplifying Technical Aspects Regarding Seasonality (STARS) Act” (H.R. 5213), recently introduced in the House of Representatives, simply applies one definition of “seasonal employee” across the health care law, both for determining employer size and for determining  offers of health care coverage. The STARS Act defines “seasonal employee” as an employee who works less than six months in customary, annually recurring work at certain periods of time in the year. The bill removes seasonal employees from the calculation to determine if the employer is large. This simplifies the calculation and reduces the chance that an employer could inadvertently violate the law by using an incorrect definition. The bill is co-sponsored by Reps. Jim Renacci (R-Ohio), Kurt Schrader (D-Ore.), Lynn Jenkins (R-Kan.) and Jim Costa (D-Calif.).

Why we like it: The ACA’s two definitions of seasonal employment, and the rules that have been issued to explain the law, are already causing frustration and confusion, especially for smaller restaurant operators who employ seasonal staff.

“The ACA’s ‘seasonal worker’ definition is vague and continues to confuse small employers as they work to comply with the law,” said Scott DeFife, NRA executive vice president of policy and government affairs. “By passing STARS, Congress can ensure that smaller seasonal employers with limited human resources capabilities have the tools and understanding necessary to comply with the Affordable Care Act and to continue to grow their businesses.”

The NRA, along with 51 state restaurant associations and other business groups, wrote to Congress in support of the STARS Act.  Read our letter and our statement.

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