Since 2010, segments of the Affordable Care Act have been implemented with the goal of realizing the complete law by 2014. While the act affects all large businesses, the food industry has been particularly vocal about the cost of the law. Since the restaurant industry has one of the highest rates of uninsured workers, they’re likely to be impacted the most by the full implementation of the Affordable Care Act.
According to the latest statistics, only 40 percent of food industry workers receive health benefits, compared to a 60 percent average across all other fields. This will change once the Affordable Care Act mandates that companies with 50+ employees working at full-time provide health benefits. To ensure that their business isn’t hit with the Affordable Care Act’s fines or penalties, CFOs should be aware of the following considerations.
What Constitutes a Full-Time Employee?
Though conventional wisdom acknowledges the 40 hour work week to be a standard for full-time, the Affordable Care Act states that any individual working 30 hours or more per week is a full-time employee as well. To determine if a worker is a full-time employee, CFOs must consider two capacities aside from hours worked:
- Standard measurement period
- Stability period
The standard measurement period should be more no less than 3 months but no more than a year. During this period, the average hours worked per week must equal at least 30. After the standard measurement period is the stability period, which will be at least 6 months long and will quantify the projected number of hours worked moving forward.
Regardless of the hours recorded during the stability period, it’s the standard measurement period statistics that actually determine whether or not an employee is full-time.
Confused? Don’t worry – the IRS outlines all the details in Notice 2012 -58.
CFOs should keep in mind that just because they cover their full-time employees, they’re not safe from the penalties that the Affordable Care Act can charge. Companies should ensure that contributions don’t consume too much of the taxpayer’s household income. To ensure that your health benefits are affordable, be sure to study the safe harbor protections from the IRS. These two determinants will help companies keep their contributions affordable and prevent fines from the IRS.