Affordable Care Act Reporting Requirements

Affordable Care Act Reporting Requirements

Part One – Important Notice:

Please note that now that the Trump administration is in office, there is a strong possibility that there will be major changes to the Affordable Care Act, including a possible repeal. Please check to keep current on this important issue in this fluid regulatory environment.

For more information on current ACA requirements, visit the National Restaurant Association’s Health Care Headquarters at The IRS’ draft forms and instructions are posted in the website’s regulatory section.

Part Two – ACA Reporting Requirements:

Make no mistake about it. No matter what size your restaurant may be, the Affordable Care Act (ACA) of 2010 will impact the way you run your business.

How the health-care law affects your restaurant depends, in great part, on whether it is classified as a small or large business. Small or large, however, one thing that holds true for all employers is that they must inform all employees about how they can access Washington’s state exchange.

Large Employers

“Applicable large employers” are defined by the health-care law as those businesses with 50 or more full time-equivalent employees including full-time salaried and hourly workers and counting part-timers based on the hours they work.

First and foremost, large employers generally face an employer mandate that they have offered all full-time employees and dependents affordable coverage of minimum value as of Jan. 1, 2015. (The mandate phases in; employers with 50 to 99 full-time-equivalent employees have until Jan. 1, 2016, to provide coverage or face penalties. The Jan. 1, 2015, deadline applied to companies with 100+ full-time-equivalent employees.)

If employers fail to comply with this regulation, they potentially face penalties of up to $2,000 per year for each full-time employee. Penalties will begin when at least one employee receives subsidized coverage through the premium tax credit on a state health-care exchange.

In calculating their penalties, employers generally will be able to exclude the first 30 full-time employees (For 2015, employers with 100 or more full-time-equivalent employees can exclude the first 80 full-time employees).

Employers will also get hit with penalties of $3,000 per year for each full-time employee who seeks subsidized coverage through the exchanges if an employer’s plan is deemed un-affordable or not of minimum value under ACA regulations. According to the ACA’s definition, “affordable” plans are self-only coverage that cost employees no more than 9.5 percent of household income. Minimum value refers to the richness of the plan’s benefits and must meet a 60 percent test.

Beginning in 2016, companies of up to 100 will be able to buy health plans for their employees through Washington’s state exchange. In 2017, the exchange may offer plans to employers with more 100 employees.

Those employers that are part of “common–control” groups with 50 or more full-time equivalent employees, if they’re offering coverage, need to be tracking as of Jan. 1, so they can report in to the IRS in 2016.

This applies to all employers with 50 to 99 full-time equivalent employees in 2015. Even if they’re not offering coverage, they still are must submit and do the statements, in 2016, to their employees and claim that they’re taking the transition relief to the IRS. Everybody with 50 full-time-equivalent employees or above needs to comply with the reporting requirements under tax code Section 6056.

Small employers

According to the ACA, a small business is one with fewer than 50 full-time-equivalent employees. This includes full-time salaried and hourly employees in addition to part-time workers counted based on their total working hours.

If your business qualifies as a small one, you will be much less impacted by ACA health-care regulations than businesses that employ 50 or more workers. Most significantly, small employers are not subject to the ACA’s employer mandate.

Small employers offering coverage may qualify for a tax credit for contributing to their employees’ health coverage. This benefit is available to restaurants with up to 25 full-time employees, based on a 40-hour workweek, who also pay at least half of the cost of coverage for their full-time salaried and hourly employees, and whose employees’ wages average no more than $50,000. Employers who take advantage of this tax credit must purchase their coverage through the state exchange. The maximum credit for the smallest restaurant with the lowest wages is 50 percent.

Small businesses that offer health plans are prohibited from imposing annual/lifetime limits on coverage. The plans must cover employees with preexisting conditions. Coverage cannot be rescinded, and children must be allowed to remain on parents’ plans until they are 26 years-old.

Keep in mind that small businesses are also subject to a 90-day limit on maximum waiting periods, and restrictions on flexible savings accounts, health savings accounts and health reimbursement, and will be subject to nondiscrimination rules once guidance has been issued by the Department of Treasury. They must also offer a “plain English” summary of benefits and coverage to employees and are required to report the value of health care coverage on W-2 forms.

Look out for some new taxes and fees under the law. Medicare tax rates have gone up for some, and some new taxes and fees imposed on health care plans under the ACA, including the “exchange reinsurance fee,” which is in effect from 2014 through 2016, may hit small businesses that purchase insurance.

Track and Report

The IRS is asking employers to track and report a massive amount of data. At the very least, everything has to be collected and recorded on a calendar month basis. You can’t do it by payroll periods. It has to be, for example, Jan. 1 to Jan. 31. That, in and of itself, means big changes for many employers.

Whether your restaurant is a small or large business, it is of utmost importance that you stay on top of the changes wrought by the ACA. Don’t take anything for granted. While this law is complex, it is the law, and you are responsible for following it.

If you do not begin collecting the required information in January, it will be very difficult, costly and time consuming to rebuild the data you will need to report.”


Rev. 1/31/17


This article is an excerpt from the Handbook for Excellent Restaurant Operations (HERO), published by the Washington Hospitality Association.  Want a hard copy of the whole manual?  It’s one of the many benefits of becoming a member!  Find out more about joining the Washington Hospitality Association here.

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