As Congress deliberated before enacting the Affordable Care Act in 2009, seemingly every aspect of the law was hotly debated—employer and individual mandates, insurance exchanges, and new revenue in the form of taxation on certain types of businesses. Much thought went into how the law would work, how insurance would be offered, who would fund it, and what responsibilities Americans would have to carry health insurance.
Significantly less thought went into the practical administration of the law, the ways that employers would sort out eligibility for coverage, and the particular challenges that employers of a large number of part-time, hourly and seasonal workers would face in complying with the new requirements.
As a restaurant owner or manager, you understand the difficulty inherent in compliance. You likely have a part-time crew of hourly workers with a broad pay scale, and staying on top of health plan eligibility is a chore. If these workers seek out subsidized coverage on an exchange, your business is at risk of accruing substantial IRS fines unless you can prove that the employees were offered coverage that complied with the law.
The U.S. Department of Health and Human Services has begun issuing these marketplace exchange subsidy notices, which are the first step in the process of IRS-generated fines. The notices can and should be appealed where appropriate, but to do so employers must be sure that their actions were in compliance with the law and, even more difficult, must have the paperwork to prove it.
Here are five things that you need to know:
1. Make Sure You Actually Receive the Notices
Employers have 90 days to file an appeal, so you do not want to lose valuable time just waiting to receive the notice if it has already been received elsewhere in your business. Make sure that your key team members know what the notice looks like and that they know to forward the form to you or the person who is managing the matter for you. If you have multiple locations, make sure people at each location are familiar with the form and know to forward it.
2. Appeals are Imminently Winnable, but You Need Proof
If you can prove that you offered an eligible employee coverage that met the minimum requirements and that was defined by the law as affordable, an appeal should be filed, but you must be sure that you have the necessary data to back up your claims. At the same time, if you know for a fact that someone was eligible but was not offered coverage, you’re out of compliance and liable to receive a fine. You will want to put measures in place now that will return your business to compliance.
3. Keep the Appeals Process on Track
One mistake that employers can make is to lose track of the appeal after it has been filed. Good record-keeping is the linchpin of the appeals process, and steps should be taken that facilitate record-keeping, such as sending in the appeal by certified mail so that delivery can be confirmed. It is important stay on top of all correspondence relating to the appeal and to respond where necessary.
4. Get Some Help
ACA employee reporting and compliance has turned out to be a tremendous challenge for employers of every stripe—large or small, privately held or publicly traded, for-profit or non-profit. As I write this, thousands of employers across the country remain out of compliance. Stay focused on offering the best dinner service or Sunday brunch that you can, and hire a third party expert to manage compliance for you and keep you from being hit with fines.
5. Do the Work on the Front End
Your HR department should take the steps needed to ensure that every eligible employee is offered coverage. If your business does this successfully, you won’t receive those ominous exchange subsidy notices. Putting the time in now will save you much time, aggravation, and expense down the road.
Successfully running a business is never easy. Running a restaurant is even harder. That is why there is a 60 percent chance of failure within three years for every restaurateur, according to Tim and Nina Zagat, authors of the Zagat guide.
Don’t stack the deck against yourself. Get your HR affairs in order, bring in the outside expertise you need for ACA compliance, and take the new law seriously, so that your margins can be your margins, and not given back to the IRS in the form of penalties.
The choice that you have is to be prepared to comply with the law, or be prepared to pay. The former may seem daunting to you, but it is far easier than the latter, as a stiff fine could be the difference between success and failure for your business.