Healthcare 101: Key Buzzwords Defined

Healthcare 101: Key Buzzwords Defined

The health care reform measure that was signed into law in 2010 contributed dozens of new buzz-phrases to the vernacular of health care, including employer mandate, individual mandate, Cadillac plans, and full-time equivalents (FTEs). If those words sound foreign to you, you’re not alone. But the National Restaurant Association (NRA) and Washington Restaurant Association (WRA) have collaborated to develop a resource to help you keep up with the lingo and the impacts of health care reform on your business. The NRA Health Care Knowledge Center’s glossary section available at www.restaurant.org/healthcare offers a wealth of information on the new terminology, reform timelines, impact case studies and much more.

“Most employers are familiar with terms like ‘full-time equivalent,’ but in the context of the health care reform law terms like this have very specific meanings that are crucial to your ability to comply. What you consider an FTE in your workplace, may not be the same as what the federal government considers an FTE. Like most laws, it’s written in government-speak so a guide to the terminology is critical,” said James Balda, SVP, Innovation & Business Development of the NRA.

Here are some examples:

Employer Mandate: Beginning in 2014, employers with 50 or more FTEs must offer affordable “minimum essential coverage” to all employees who average 30 or more hours a week in a given month, or face penalties. The specific definition of “minimum essential coverage” is being determined through the regulatory process. While part-time hours are used in the gateway calculation for determining the 50-FTE-employee threshold, there is no requirement to offer such employees coverage and they do not generate penalties if they are not offered affordable coverage.

Individual Mandate: The law requires every person legally present in the United States to maintain “minimum essential health care coverage” beginning in 2014, or pay a penalty. The requirement may be satisfied by participating in an employer-sponsored plan, by purchasing individual policies, by obtaining coverage under a state insurance exchange, or by gaining coverage through Medicare, Medicaid or other governmental programs.

Cadillac Plans: Beginning in 2018, the law requires employees who are covered by the most expensive plans to pay a new 40% excise tax on the value of coverage that exceeds certain dollar thresholds.

Full-Time Equivalents: Part-time workers’ hours are counted in determining a restaurant’s total number of full-time-equivalent (FTE) workers for the various provisions of the law. The gateway calculation for determining if a restaurant meets the 50-FTE threshold that triggers the employer mandate takes the total number of hours worked by part-timers each month and divides by 120, the equivalent of a 30-hour work. That number is then added to the total number of full-time salaried and hourly employees.

These are just a few examples of the many terms and definitions restaurant employers will need to be familiar with as they evaluate the impact of the law on their bottom line. For more information on health care reform visit www.restaurant.org/healthcare or healthcare.warestaurant.org.